Clunk: The sound of Obama's auto bailout

Can't argue that the Cash for Clunkers program hasn't been a tremendous


And the big winner is...Toyota

success--for all those people who got to buy a new car with big subsidies provided by the rest of us and all our children.

But the Clunkers program has been something of a clunk itself. Start with the news that eight of the top ten new cars sold through the program are foreign brands. As the Associated Press reported:

Asian automakers have increased their share of sales under the $3
billion Cash for Clunkers auto rebate program, according to data
released Friday by the federal government.

Eight of the
top-10-selling vehicles are made by Japanese and South Korean
companies, with the Toyota Corolla claiming the top spot as the most
popular car in the trade-in program. Toyota Motor Corp. also overtook
General Motors Co. with the greatest share of sales under Cash for
Clunkers, which offers consumers discounts of $3,500 or $4,500 for
trading in older vehicles for more fuel-efficient new models.

only two vehicles made by American manufacturers on the list of top
sellers were the Ford Focus and the Ford Escape. The Focus had held the
top spot early on in the program, which officially began July 27, but
it has since slid to No. 3.

Then, there are a myriad of other Clunker problems.

  • Dealers are having a hard time getting reimbursed: Fox News reported:

The federal government has only reimbursed auto dealers for 2
percent of the claims they've submitted through the popular "cash for
clunkers" program, a Pennsylvania congressman said, calling on the
Obama administration to help speed up the process. 


Joe Sestak, D-Pa., called for "immediate action" to address the problem
in a statement Sunday, after writing a letter to President Obama
Saturday expressing his concerns. 

In the letter, Sestak said only 2 percent of claims have been paid and
that four of every five applications have been "rejected for minor oversight." 

recent days, auto dealers across the country have been complaining that
the reimbursement payments are slow to process. And they said some of
their applications were being rejected because of apparent procedural
issues. The statistics Sestak cited suggest those complaints are not
based on isolated incidents.

  • Used car dealers are complaining that their business has dried up.
  • Charities that depended on clunker car donations are seeing their revenues decline.
  • Auto repair shops anticipate that they will have harder time
    finding cheap, but good replacement parts because the Clunkers program
    requires that the engines be destroyed, even though their parts are
    still useful. New parts will kick up the price for anyone who has his
    car repaired (including those who couldn't afford new cars despite the
    big Clunker subsidy. For more on that point, check out this story.)

The Clunkers program, of course, was designed to pull the American auto
industry out of its crisis. Indeed, some domestic car markets are
increasing production because their dealers' lots have been emptied of
inventory. But, it obviously has been a bigger boost to Japanese and
Korean car makers, whose brands still are preferred by American
motorists. And aren't we all glad to do them a favor, when all we heard
in the build-up of all the auto bailouts was how American automakers
and workers were going to get hurt, badly.

So, for all the billions spent on bailing out GM and Chrysler, one
should note that Ford, the one American automaker that didn't take
government loans, is reporting a profit.

Some of us from the start argued that we shouldn't bail out the car
makers, but we were told, "Oh, no," the companies will go into
bankruptcy and think of all the jobs that will be lost."

Well, GM and Chrysler went into bankruptcy anyway and jobs were lost
and dealerships closed. The American public ended up owning these two
clunkers. We let Ford alone and it makes a profit. Is there a lesson in

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