The Cash-For-Clunkers law — which gives a $4,500 rebate to people who turn in an old jalopy when buying a new car — was roundly slammed before it was signed into law.
And apparently even the government didn’t think it would be all that popular–because it’s already almost bankrupt due to its popularity.
WSJ: Car dealers on Wednesday began expressing concern that the government’s “cash for clunkers” incentive program could run out of money as soon as the end of August due to strong initial response from consumers.
“It’s important for customers to act because we don’t know when the curtain is going to fall on this thing,” said John McEleney, chairman of the National Automobile Dealers Association.
Mr. McEleney said he has been fielding calls from dealers with this concern, adding he suspects the $1 billion set aside for the program could run out within a month based on early response.
The program, which offers up to $4,500 in federal rebates for consumers who trade in older vehicles to buy new, more fuel-efficient models, began Friday and is supposed to run until Nov. 1.
What the government probably didn’t take into account was the fact that car owners would trade in cars with potential resale value of $5,000+, a seemingly irrational move to leave money off the table. But that’s exactly what’s happening (sending some perfectly good vintage cars to car heaven in the process).
All that being said, what are we defining as success here? Sure, we can pull demand now from the future, but where does that get us next year? Oh wait, that’s next year’s problem. We’ll come back to it then.
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