GM has just announced it will give dealers cash advances to cover “cash for clunkers” rebates while dealers wait for the government to process them. It’s a smart move in support of a dumb government program. As I’ve written before, cash for clunkers amounts to the federal government extending yet another hand to the auto industry to provide a short-term sales fillip at a time when what the sector needs isn’t artificial stimulus but normalcy. The industry needs to regroup after the horrific collapse and government-aided rebirth of General Motors and Chrysler. Now that it’s become clear Washington, D.C., was ill-prepared to administer the clunkers program – and as dealers complain they’re taking clunkers but not getting money owed by Uncle Sam – GM has no choice but to extend its own helping hand, the irony being that GM’s aid-to-dealers in support of the clunkers scheme comes largely from Uncle Sam (GM’s 61% owner) himself. UPDATE: We’re now reporting Chrysler will also give advances to dealers to cover cash for clunkers rebates. Also just out from DJN’s Josh Mitchell: the government’s cash for clunkers program will end Aug. 24 at 8 p.m. This, after a taxpayer expenditure of $3 billion.
22 Comments to GM’s Clunker; Now Chrysler
Tim KellyAugust 20, 2009
I find this hard to believe… the government not running a program efficiently and effectively?? How can it be? And yet they want us to believe they can manage the healthcare successfully. I’m starting to believe in Easter Bunnies, Santa Clause and the Tooth Fairy again 
Don’t you mean government aided rebirth of General Motors and Chrysler? By all means, Ford has taken advantage of a variety of subsidies and low interest loan programs, but has managed to avoid bankruptcy restructuring at the hands of Uncle Sam.
The US imports 14 million barrels of oil a day, 200 billion gallons a year roughly. Total defense funding is a trillion dollars a year, of which we might say that at least half goes to protect oil supplies or protect the free peoples against oil suppliers. Say a new car getting 25 miles per gallon replaces a clunker getting 15, and both are driven 12 thousand miles a year. The clunker program saves 320 gallons a year, and can be thought of as lowering defense needs by 800 dollars. Not bad for a $4500 investment of taxpayers money!
And that is before counting the environmental, health, and road safety benefits. yes, it does have the disadvantage of rewarding inefficient behavior and encouraging the use of subsidized individual transportation, but altogether is a good program considering the economic circumstances.
TomAugust 20, 2009
“The industry needs to regroup after the horrific collapse and government-aided rebirth of General Motors and Ford”
You mean General Motors and Chrysler
“The industry needs to regroup after the horrific collapse and government-aided rebirth of General Motors and Ford.”
Pretty sure it was GM and Chrysler. Your lack of ability to get even the simplest facts correct completely takes away any credibility this post ever had.
Paul DaileyAugust 20, 2009
Ms. Stern, How did the government aid the rebirth of Ford? Otherwise, I agree that the Feds are managing to “kite their checks” to all involved. (Maybe none of the payments will bounce if the mail slows down more?)Talk about a clunker!
JoeAugust 20, 2009
Uhhh – you mean government-aided rebirth of GM and Chrysler, not GM and Ford.
James FrickAugust 20, 2009
What is the world coming to? A private company helping to make a government program work. If the government takes over healthcare, which company will step in? Cash for clunkers is small enough GM can help out, but is there a company or companies big enough to advance the cash for millions of patients?
DerekAugust 20, 2009
I think you mean the government-aided rebirth of GM and Chrysler, not GM and Ford.
Gabriella SternAugust 20, 2009
I do, indeed. Thanks for catching that. I’ve made the change. Best, Gabby
Gabriella SternAugust 20, 2009
Yes, I do. Thanks for catching that. G
Gabriella SternAugust 20, 2009
I meant Chrysler. So sorry. Thanks for your comment.
Gabriella SternAugust 20, 2009
Apologies for my error. Best, Gabby
Gabriella SternAugust 20, 2009
Yes, apologies for the error. G
Gabriella SternAugust 20, 2009
Yes, I meant Chrysler. Apologies. Gabby
Gabriella SternAugust 20, 2009
Yes, huge apologies. Gabby
Bill LongAugust 20, 2009
“horrific collapse of … General Motors and Ford”. Ford! They were not part of any rebirth. Might want to check with someone familiar with the Auto Industry before posting here.
Gabriella SternAugust 20, 2009
Apologies for the error. Have corrected. G
DentonjAugust 21, 2009
It seems the bigger point is being missed. GM and Chrysler are choosing to help their dealers. That’s a different approach right there and makes one wonder why the vaunted Toyota and Honda chose not to help their dealers who are also selling plenty of cars under the program. Maybe our perceptions are not always right….
Gabriella SternAugust 21, 2009
Yes, apologies. I’ve made the change. Gabby
Gabriella SternAugust 21, 2009
Hmmm. My view is the cars need to sell themselves – without government aid and without GM lending a hand while the government sorts out the administrative aspects of Cash for Clunkers. Thank you for weighing in, and please keep the comments coming as we continue to blog about the news! Best, Gabby
August 20, 2009
Ford did not collapse or recieve any goverment aid get your facts right.