Last night ABC News reported on some of the difficulties car dealers and buyers are having with the Cash for Clunkers program that was saved from the fire by Congress two days ago. In it, they reported that some dealers are not getting reimbursed for the cars they scrap, buyers are not getting the rebates fast enough, and other used car dealers are crying foul that they could be re-selling some of these "clunkers" for a small profit.
Newsweek asks, "Is it still a good time to buy a car?"
NYT Lede Blog describes the difficulties smaller dealerships are having.
Some Republican Senators and Representatives oppose this program just out of principle, with no real basis, but personally I think it's hurting the network of car dealers by driving their profits down. Sure, there were 250,000 cars sold in the past week or so, but is it really fair to call that a victory when it is somewhat artificial because it was brought on by what amounts to a firesale on automobiles?
I never approve of propping up a market, and it seems that is what's happening. It's tough to find middle ground, because it's getting people to buy fuel-efficient cars (me included, though I didn't use this program), but there's a big downside in the form of hurting small businesses by having them wait in limbo for money that may never come to them.
The government could do one simple change: set up a wholesale market for these used cars, and export them overseas where there is demand. Before everyone shouts me down as hating the environment, there's an upside: In the Middle East, anyone besides Saudi royalty drives around in cars that are worse than most of these cars people here are turning in. The poor and middle-class clamor for a nice big, more fuel-efficient American car to drive around in -- the very same cars that are being sent to scrapyards all in the interest of a tentative government-backed rebate program that's a serious financial risk to the market it's inflating.
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