The World's Largest Demolition Derby

AKA - Cash for Clunkers - You know, it figures that just when I've finally convinced myself to take my old Nissan pickup truck in and take advantage of the new CARS program, they'd run out of money. It finally made sense to me when I did the math that I could get $9,000 on a Chrysler vehicle for the truck that I spent $11,000 on a lifetime ago. I was slowed down trying to figure out how my in-laws and neighbors were going to get mulch and make landfill runs in that new convertible Sebring my daughter had her eyes on (you truck owners know what I'm talking about).

C.A.R.S is a typical good news/bad news program. The good news is that "Cash for Clunkers" was/is a success. People across the country leapt at the opportunity to trade in their old cars for newer, more fuel efficient models. Mission accomplished! 

The bad news... "Cash for Clunkers" was/is a success. 

Free Market or Flea Market? Government Paying for Junkers

by Ron Daly

Have you seen those commercials for "mail us your gold" things? You put old jewelry in an envelope, mail it to these people, and they send you cash. Or so we're lead to believe the thought that people would pay handsomely for your bits of scrap metal.  

Now from "gold" to "old" in the next round of the government trying to boosting the economy. If your car was made after 1984 and gets 18 miles(or less)-per-gallon, you could qualify for an incentive under the "Cash-for-Clunkers" program from the Government of up to $4,500. Seriously. Click here for the WSJ article. The idea is to take people's old, low mpg vehicles and turn them into...well, what DO they do with traded-in vehicles? Scrap? Recyclables? Monster-truck rally? Is the goal to re-sell them to a developing country? We can't sell them here - that's half the point. Trying to drive up sales of new vehicles and defibrillate Detroit is the overall aim of the incentive. So, what happens? They take in old cars and you go buy a new one - presumably one with a high fuel-efficiency. For cars, it's 32 mpg and under $45,000 to get a $4,500 incentive. Small trucks need no price restriction, 23 mpg minimum for the $4,500. Large trucks have no price restriction and only have to get 17 mpg for the incentive. 

My predictions for this:

1) It'll go through, but it won't be much help in saving the car industry OR lessening our dependence on oil. 

2) The one place it might be good for automakers (with a focus on American automakers)? Maybe GM can move some Volts and Malibu Hybrids, two vehicles that are focused on reducing carbon emissions. 

3) Lambourghini is going to start classifying the Gallardo as an SUV 

4) While captive financing will be offered by the dealers, Credit Unions will start to find ways to capitalize on the program to make sure that the industry keeps its fair share of the auto loan pie. 

Anyone looking at this already? Share your thoughts.

Good for Credit Unions! CUs Beat Bush to the Punch

by Ron Daly 

Last week we brought word about the Michigan Credit Union League's "Invest in America" program (click here for our post, "UPDATE: Michigan Credit Union League offering $10 billion in auto loans"). In short, the program was built to offer low-rate car loans to people who wanted to purchase a GM vehicle in the midwest - with a focus on areas that are heavy producers of American automobiles. $10 billion was made available to back the loans and encourage credit union members to purchase an American car and help the troubled auto industry. 

The program has since increased from $10 billion in available loans to $20 billion. Not only is there more money to be lent, there are more cars to choose from (Chrysler's joined in) and greater incentives (as much as $1,000 up front). You can read the story from CU Journal by clicking here. 

It wasn't long after the last story broke that Congress passed the buck to President Bush, forcing him to give the auto makers $17.4 Billion in federal aid. The assistance came with non-binding stipulations for change and a mandate to prove viability by March of '09 (read all about it in the WSJ article - click here).