Cash For Clunkers

"Good design can't fix broken business models." ~ Jeffrey Veen


OK. Let me add my two cents about Barack Hussein Obama's "cash for clunkers" program.

Many people may believe this is only Obama's scam.

But, the dealers are in on it, too.

One or two of my regular readers may remember last year, my wife purchased a brand new 2008 Kia Spectra from the local Kia dealership here.

Since then, the Ford Taurus she gave me has developed some rather expensive problems. I am not sure exactly what they are, but when there is an audible clunk and a violent jerk between the automatic transmission's first and second gears, it cannot be a good sign. Add to that, a high pitched squeaking sound emanating from under the hood somewhere in the vicinity of the alternator, and the fact that the battery won't hold a charge, I'm thinking any repairs done to it will ultimately end up being more costly than the car is worth.

So, my wife and I set out on a quest to find a suitable replacement yesterday.

The first thing I noticed upon entering the Saturn dealership was all the new cars being displayed on the lot had numbers and letters painted on their windshields that advertised the prices before and after the cash to be paid for the buyer's "clunker".

Not having been in a Saturn dealership before, I had no idea what the regular price for a Saturn should be, but considering Saturns have plastic bodies, I thought the prices shown were rather high.

I began to suspect the dealership had possibly raised the sticker prices on the new cars approximately $4500.00 so they could take full advantage of Obama's generous offer to consumers.

This is an old ploy in retail sales, particularly, in retail car sales.

See, what retailers do is raise the prices on their products before they advertise a sale. For example, a furniture dealer (furniture dealers and car dealers are probably the most common retailers that pull this scam) raises the price on a recliner by 50 to 100 dollars. Then, they advertise a great big "going out of business" sale, or a "lost our lease" sale, etc, and inform their prospective customers that they will reluctantly let their recliners go with a whopping 35-75 dollar discount.

Thus, not only do the dealers receive more than the manufacturers suggested retail price (MSRP), they get a bit of an extra profit on top of that.

And the customer thinks he got a bargain.

There is a common retail sales term for this practice but I can't remember what the term is. I used to know, because the management of a company I once worked for made it very clear that those tactics, if utilized by a salesman, would not be tolerated. The company was proud of the fact that they did not resort to questionable tactics to make sales.

In the end, the company went bankrupt because they lost too many lawsuits filed against them for using unethical sales practices.

But I digress.

After test driving a nice SUV, we then went back to the Kia dealer from where we last purchased a vehicle. Upon entering the sales lot, the first thing I noticed was the advertising painted on every new car's windshield, also advertising before "cash for clunker" prices, and after "cash for clunkers" discounts.

The second thing I noticed was that the prices before Obama's promised rebates were about $5,000.00 higher this year for the same models then they were last year.

Coincidence? Inflation? I don't think so.

The dealers are losing nothing on the "cash for clunkers" deal. In fact, the dealers are in Fat city. Not only do they get reimbursed for every $4,500.00 they pay out to customers who trade in a qualifying clunker, if the government does indeed reimburse them (which would make another entire blogpost in itself), but they still get the MSRP on every sale, meaning the dealer will get their standard profit plus an extra $4500.00, courtesy of --- who?

Why, us! The American taxpayer!

Oh, and by the way. Do you know what cars qualify as clunkers in this benevolent Obama government program?

To qualify, your clunker doesn't necessarily have to "clunk".

It just has to have 18 or less MPG.

By the book.

In other words, if your "clunker" was, when it was new, originally estimated to get an average of 18 miles or less to one gallon of gas (highway non-stop driving) your car qualifies as a "clunker".

Regardless of whether it still runs perfect or not.

My Ford Taurus, which makes an audible "clunk" when shifting from first to second gear, does not qualify as a "clunker". It's average estimated MPG, when it was brand new, never been driven, still on the lot, is 27 on the highway. I don't remember it ever getting better than 20 MPG on it's best days.

Cars that qualify as a "clunker", outside of a few SUV's and the Hummer, represent woefully few of the real clunkers now on our nation's roadways.

Also, while I'm on the subject, do you know what they do with the cars that they pay $4500.00 for? They drain all the fluids out of them, run the engines until they "lock up", and then send them off to the salvage yard to be crushed and ostensibly recycled to make yard ornaments and other attractive and useful items.

Well I'm not sure about that, but they do ship them off to the metal salvage companies.

That's part of Obama's law.

The salesman we talked to last night said many cars that were in good working condition were sent off to salvage along with the real clunkers. Meaning the dealer could conceivably clean them up a little, do some minor repairs, and resell them at a huge profit, but the government won't allow them.

They are to be scrapped, regardless of condition.

This strikes me as an enormous waste of money and common sense.

So, basically, this whole "cash for Clunkers" deal is a huge unethical scam, which frankly, can be expected from unscrupulous, slimy, shady, used car dealers and furniture dealers, etc.

Don't get me wrong. I'm all for making a profit, and if a businessman can make huge profits without resorting to unethical, illegal tactics, more power to him.

But, it is absolutely scandalous when it comes at the hands of a supposedly benevolent, empathetic, Democratically run Federal Government.

And that, as Kevin Jackson would say, is my rant.