The Great GMI Analysis of the US Auto Market: C4C edition!

[Novak454]

Originally Posted by desmo9

The benefits the imports have seen in this US-taxpayer-funded scheme are remarkable. The Feds could have thrown that $1 billion we just handed Japan and Korea into a mass transit program or an alternative energy development -- which puts money in the economy with jobs, and pays dividends down the road.

The current administration has completely lost my respect. I have no faith in his ability to apply sound policy to any complex issue, be it healthcare, housing, or autos.

Moreover, C4C wasn't even an equitable policy ... folks with one old but efficient beater got nothing. Those with an old van in the driveway along with a few other newer cars -- here's $4500 for another new car. But all taxpayers get to fund it. Simply unreal.

Welcome to change brother.

[PhishPhood]

Originally Posted by Bravada

I don't think anybody with a passing understanding of economics would find this programme any good apart from the roaring ghost of John Maynard Keyenes. I wouldn't even put that up for discussion, after all I don't think we've ever discussed creationism or the setup of the solar system. Let's move on please.

It appears that the entire world is going along with the prevailing sentiment that this is the time to test Keynsian theory. NA, W Europe, Japan, China are all buying into Keynes' theory that when economies crash the governments must step in and make up the shortfalls by massive spending.

This is one that worked better than expected.

[PhishPhood]

Originally Posted by Novak454

Welcome to change brother.

You betcha. If this program is indicative of what's to come then bring the next programs on as fast as possible. Even though the Dems and Obama had little or nothing to do with creating the program they'll get all the credit for the boost. In fact it was a bipartisan effort than no smart politico would oppose. Too many benefitted from it. Who'd want to fight against making voters happy?

[CUtiger08]

Originally Posted by 63GrandSport001

I extremely doubt that the market would have had up up tick................

Based on current market trend and the fact that some 600,000+ vehicles were sold under that program.

This time last year the market was heading south so at the best without C4C the down turn wouldn't have been so bad.

So out of the 1.26 million cars sold last month, were those 600,000+ sold just because of this program, or just 600,000+ that just happened to be qualified for the program?

Assuming 1/3 of those cars would have been bought anyway, then we'd have had broken even in YTD sales/day (I don't compare to last year). If less than that, then we'd have gone down. If more, than then we'd have gone up.

Also, as I said, many segments where C4C shouldn't have had an effect were up... including larger luxury cars. If small and midsized mainstream cars had just broken even while the luxury SUV's and larger sedans went up like they did, then the market would still been up, just not by over 6%. As for current market trends, June was up over May, long before C4C was underway... and July over June with only a little C4C influence.



As for C4C... as much as I dislike goverment invervention in general, I would still wait to see the sales for the rest of the year before passing judgement either way on this program... IMO "pull ahead" was definately in effect, the only question is by how much.

Also, I'd wait to see the automakers profits as well. This time of year many cars come with huge cash on the hood to clear out last year's models and make room for the new ones... but this year the goverment did that. So even if overall sales aren't affected in the long term, I bet not having to put thousands more in cash on the hood of over 600,000 cars might add up, especially for those carmakers that are close to the break-even point.

[vcs2600]

Thanks again Bravada & CUtiger08 - this is a great resource!

[desmo9]

Originally Posted by PhishPhood

Since neither the President nor the Dems thought this up, yet you somehow assign blame to them for what is probably the best stimulus program in recent history, your politically skewed viewpoint is suspect.

If you need substantiation of why the program was so good...go over to CNBC and look at some of the discussions there such as from the CEO of AutoNation. You may return to your shell of hatred now.

Oooh, CNBC and Autonation. Objectivity galore! I'd expect anyone affiliated with selling cars to see some fruits in the program, because they all gained.

To call it the "best" stimulus program is relative to some weak programs, for one, but is rooted in some bias. True, my assessment that it's unwise to throw money out of the economy may be focused on just one aspect of the issue, but the "look at the money that remained in the US, though!" camp are also focusing on but one slice. This program was a typical hasty response to problems in the economy -- throw money out there at any cost and hope for the best. Clearly, any money thrown into the mix will make things look better right off, because no one cares about where the money is coming from. I'd argue that a better policy would have seen the advantages of C4C without losing 50% of the money right off the bat to other countries. The program needs a ton of that indirect trickle down mentioned above just to break even. And if the programs don't yield a net gain, they're bad programs -- unless you just add that $2B spent to a huge deficit we're numb to, in which case it all looks like a gain in the short-term and any program is a good program.

Deeper issue than you're apparently willing or able to consider.

[desmo9]

Originally Posted by PhishPhood

Even though the Dems and Obama had little or nothing to do with creating the program they'll get all the credit for the boost.

Right, and when I assigned the program's faults to them, you had the following to say. So which is it? They get the accolades but are not deserving of the faults? Pick a position.

Originally Posted by PhishPhood

Since neither the President nor the Dems thought this up, yet you somehow assign blame to them

It was launched under the administration, and that's where the accountability lies. Makes no difference who "thought it up."

[Bravada]

I'd argue that a better policy would have seen the advantages of C4C without losing 50% of the money right off the bat to other countries.

Man, what are you talking about? Up to 90% of a price of a Corolla or Civic you buy remains in North America. Moreover, the automakers now struggle to keep factories open and dealers afloat, so there is very little going back to even their North America HQs. And all that's coming in is probably spent on advertising. Factories, dealers, advertising companies, media, local suppliers, logistics providers etc. employ Americans. All in all, a very thin tirckle of money goes "out of the economy".

Anyhow, the money would've been better and more ecologically spent on education programmes for the unemployed, start-up support for entrepreneurs or cheap investment loans for innovative companies.

Or, if you want to actually reduce gasoline consumption while remaining on the green side, encourage people to move back to cities, offering downtown housing to people with mortgage problems. Fannie Mae and the rest of this whole intricate scheme could buy houses whose value has fallen below the mortgage price from people who have problems paying back (actually, the guvmint wouldn't have to pay back the whole amount to banks then, the banks would be happy to get a fraction given the stale real estate market, the glut of suburban McHomes and the fact that most people who default actually cannot repay their debt by any means).

I've just invented the above as I write. I guess we could all come up with better ideas to stimulate the economy and SUSTAINABLY change it to enable further growth, not just one month of headlines.

[desmo9]

Originally Posted by Bravada

Man, what are you talking about? Up to 90% of a price of a Corolla or Civic you buy remains in North America.

That's the type of comment you need a reference for. It's highly doubtful. Consider all the value on the cost side, including suppliers, and then look at where the profit winds up (gross less any reinvestment in North American facilities or development). I really doubt the number is anywhere near 90%.

Of course, not 100 % of the price of American-branded cars sold under the program is local, either. So it probably brings one right back up to the net $ 1 billion of U.S. tax dollars being used to prop-up foreign economies.

But hey, in the grand scheme of things, considering all the money we spend on foreign interests, it's nothing when you spend they way they do. Not good when a billion dollars is kicked around like pocket change due to its tiny percentage of a multi-trillion dollar deficit. It's almost like charging $5K for a new media system for your home, and thinking nothing of it because you have a $500K mortgage you can't pay back anyway. I mean, you've only increased your overall debt by a tiny amount so the $5K looks like nothing. I think that's kind of where we've wound up as a country.

[Bravada]

That's the type of comment you need a reference for. It's highly doubtful. Consider all the value on the cost side, including suppliers, and then look at where the profit winds up (gross less any reinvestment in North American facilities or development). I really doubt the number is anywhere near 90%.

New car sales run at a very low margin, compact cars in US are often sold at a loss. You make it up in service, aftermarket and financing. Of course there is a lot of money going out of the US, and even NAFTA, when it comes to components, raw materials and some outsourced services down the supply chain, in copor headquarters etc., but same holds true for "domestic" automakers. I am only talking the mythical "profits" going to Japan. If you want profits, see Lexus, Prius and SUVs/trucks.

[desmo9]

Originally Posted by Bravada

New car sales run at a very low margin, compact cars in US are often sold at a loss. You make it up in service, aftermarket and financing. Of course there is a lot of money going out of the US, and even NAFTA, when it comes to components, raw materials and some outsourced services down the supply chain, in copor headquarters etc., but same holds true for "domestic" automakers. I am only talking the mythical "profits" going to Japan. If you want profits, see Lexus, Prius and SUVs/trucks.

But the profits you're referring to are only bottom line. Of the say 90% of what's cost, there's all sorts of mark up baked in, whether it's that of a lab hired to do testing or the profit earned by the engineering staff that ultimately went into the local economy. Overall, of $20K paid for a Japanese-branded car -- even one assembled in the US -- a very high percentage of that $20K is smack dab in Japan's economy now. Not just the profit they might have made on the sale of the car.

[Bravada]

Of the say 90% of what's cost, there's all sorts of mark up baked in, whether it's that of a lab hired to do testing or the profit earned by the engineering staff that ultimately went into the local economy. Overall, of $20K paid for a Japanese-branded car -- even one assembled in the US -- a very high percentage of that $20K is smack dab in Japan's economy now. Not just the profit they might have made on the sale of the car.

Design and engineering is a relatively low part of the car's price, covered by the "margin" the automaker makes - relatively low on a compact car, as I've said. And Toyota does as little as possible in terms of engineering changes to their cars. On top of that, IIRC, the responsibility for the actually most redesigned part, the interior, rests with Toyota's European studios.

As concerns mechanicals/engineering, a lot is done by the suppliers. And not all of them are Japanese, neither do they do their development in Japan alone. All in all, a rather thin trickle of "value" goes to Japan just by merit of being a Japanese-branded car.

BTW, GM does the most of their powertrain development, chassis engineering, exterior design/aero, interiors etc. outside of North America.

[2002 Caddy]

This thread started out with a political bent and has gotten worse. It needs to be locked or deleted.

The truth about C4C is it was an Economic Success, it worked here, and it worked in Germany and elsewhere where it was tried.

I have a masters degree in business and I have taken several post graduate economic courses... Counter cyclical spending works. It worked in the 30's, 40's, 50's, 60's, 80's and its working now.

Sorry to burst everyone's bubble (pun intended), but housing prices are stabilizing, the Stock market it up about 20% since January, and inflation is still under control... The only remaining "bad" indicator, a trailing one, employment will take a few more months... How soon we forget... Only 5 or 6 months ago people were predicting a recession that would make the 30's look like a picnic in the park... Now everyone is taking bets as to when the recovery will get going full swing... And we haven't spent even half of the stimulus yet.

I was at a outlet mall a couple of weeks ago doing some back to school shopping with the wife and kids... the place was a freaking zoo... I turned to the wife and asked... "I thought there was a recession" people were literally ripping jeans off of the shelves and out of each others hands... The food court had line ups that were over 15 minutes long... Insain!

Last weekend we were at Lowe's buying new blinds for the house... The guy in the line infront of me spent almost $1000 on tools, I dropped $600 on blinds... Consumer confidence is WAY up.

[desmo9]

Originally Posted by Bravada

BTW, GM does the most of their powertrain development, chassis engineering, exterior design/aero, interiors etc. outside of North America.

Most? I'd make it some, or a little bit. Most of that work remains in the U.S -- for now. shedding Opel will techically bias even more to the U.S.

[desmo9]

Originally Posted by 2002 Caddy

Sorry to burst everyone's bubble (pun intended), but housing prices are stabilizing, the Stock market it up about 20% since January, and inflation is still under control... The only remaining "bad" indicator, a trailing one, employment will take a few more months

How about national debt? Forget that one?

Last weekend we were at Lowe's buying new blinds for the house... The guy in the line infront of me spent almost $1000 on tools, I dropped $600 on blinds... Consumer confidence is WAY up.

The same thing could be found months ago, at the height of the mess. Pretty narrow sample. Sure, consumer confidence is up but some predict that unemployment will remain in the double digits for years.

This thread started out with a political bent and has gotten worse. It needs to be locked or deleted.

You folks that want to close down a thread because you don't agree with it or it's opinionated, should think about going away to some shiny happy people forum someplace.