Analysts Offer Suggestions on Spurring Car Sales
Everyone’s got an idea about what should happen with troubled American automakers, but analysts at Citi Investment Research and CSM Worldwide have put forward two more options. Namely, take what has worked elsewhere and bankroll the plan for the entire auto industry.
The first idea is scrappage, in which the government offers an incentive — say $4,500 — for drivers to scrap their old, inefficient vehicles for new models. As we’ve already reported, several European countries are doing this with positive results. CSM estimates scrappage programs have bumped sales by 400,000 vehicles in the countries that are trying them, and that they could result in an additional million new-car sales for the U.S. in 2009 and 1.5 million to 3 million in 2010. Sales for 2009 are projected to be off by at least 5 million units.
The second idea is to take Hyundai’s successful Assurance program and replicate it on a federal level. Analysts believe that for $5 billion or less, the government could guarantee that if a car buyer lost his or her job and could not find work after three months, that person could return the car with no penalty. It’s thought this might tap into a pent-up demand for new vehicles as people hold off buying while they’re worried about job security.
Both of these plans would have the advantage of stimulating not just one or two automakers, but the entire industry. The scrappage plan would likely offer the most immediate boost, but the public might see the moves as another bailout. What do you think? Should there be a stimulus for consumers? A price cap? Which do you think is a better idea?
Analysts Share Ideas to Help Auto Industry (USA Today)
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I like the scrappage idea. I'd take $4500 for my old F150.
But would you buy a Ranger to replace it?
I'd take $4500 for my old Altima and replace it with a Frontier.
Scrappage seems so wasteful.
B,
Ever hear of recycling?
Adrian,
What's the recycling rate for an automobile? 100%?
scrapping definitely leads to the metal being recycled. i'd guess that is near 100%. The rest? I have no idea.
Offer the incentive ONLY if a buyer selects a car made in an American assembly plant-- that's not over-wrought Americanism or protectionism because that plan would also include many of the "transplants" made here in the states (Subaru, Honda Accord, Toyota Tundra, Mercedes SUV, etc.) as well as many of the cars we traditionally think of as "American" (Ford f150, some Chevys and Buicks, Jeep, etc.) LET'S PUT AMERICAN HANDS BACK TO WORK.
If the governement would hand me a check on the spot I would trust the scrappage deal. Unfortunately after it becomes filter though the tax system then no way am I going to do the scrappage deal.
dodgefan, you are right. the same goes for the stimulus there are too many "may" and "up to" in it as to know much much money people wil actually save. thikinng of doing insulation for my house, but i "may" get "up to" 35% or $1,5000 in next year's taxes. in other words, i could spend 2k on it and get like $80 back. who knows.