Sunday, September 13, 2009

Business & Marketing: "Cash For Clunkers" Creates Good Used Car Shortage & Higher Prices

The hope of the federal government and the automakers was that the "Cash For Clunkers" program would spur more new car sales and put more high mileage automobiles and trucks on the streets. It was intended to be a win-win business marketing program. Indeed, at least 700,000 total new units were sold during the campaign. However, the program was not without some highly negative consequences for the auto business. Many top selling used auto lots now find themselves in a real shortage for quality used cars and trucks as so many good quality vehicles that were hardly classified as true "clunkers" were turned in and destroyed in the program. Even many new car dealers who sell used cars find themselves being forced to run ads offering cash or high trade values for quality used vehicles to sell.

A further problem with the "Cash For Clunkers" is the huge carbon footprint it creates. The amount of environmental damage from having to create 700,000 new vehicle units includes strip mining of mountains and huge amounts of air pollution to either create the new vehicles or to tear down the old ones. It is highly difficult to see where slightly better gas mileage figures for the new vehicles compared to the older ones will even come close to matching the huge carbon imprint of creating whole new units. It also furthers a throwaway mentality for Americans, rather than conservation or getting extended life from products.

The strange thing about Americans is just how wasteful of motor vehicles that they already are. Why government should encourage this is highly suspect.This sharply contrasts with Cuba where 1950's vintage automobiles are still in daily use because of the embargo. Given half the opportunity, Americans will waste something no matter the outlay cost.

Also, if the government really wanted to save gasoline, it could run all government cars on high quality synthetic oils like AMSOIL for example and cut gasoline use by around 10%, but it doesn't. AMSOIL saves so much energy that one large bakery in Clackamas, Oregon cut electrical costs by $100,000 a year by running gears and gear cases on AMSOIL gear lube instead of petroleum oil. Yet government fails to promote the huge savings of high quality synthetic oils like AMSOIL.

Further some cities continue to erect fuel wasting "traffic calming" devices such as speed bumps or humps or excessive stop signs. This wastes fuel, or may encourage many motorists to buy a 10-15mpg SUV because so many speed bumps near their homes just tear up normal automobile suspensions compared to trucks and cost motorists average increased repair costs of $500 or more on normal automobiles. Further, many so-called "traffic calming" devices have been known to aggravate neck injuries or to lead to increased accidents by bicycles and automobiles. Sometimes with fatal results. "Traffic calming" devices also slow emergency vehicle response and result in more fire deaths and injuries and damage or slower 911 responses creating more needless deaths and insurance payouts costing insurance companies to charge higher premiums. California courts have already held companies that install speed bumps liable for damages. In some cases, injured bicycists have been awarded $125,000 settlements for injuries caused by speed bumps and humps. It is estimated that for every one life that "traffic calming" devices save it costs 85 deaths due to increased accidents or slower 911 response time.
Further many city leaders just don't appear intelligent enough to understand that placing road hazzards in the middle streets such as speed bumps or humps will certainly cause far injuries or deaths than they will save by slowing traffic by a marginal amount. However, some cities like the City Of Portland, Oregon receives a sort of royalty kickback from a major local speed hump manufacturer despite serious safety and product liability issues with their products compared to normal cheaper stop signs which are far safer and cheaper. But who ever said that government was in the business of saving money anyway?

On many levels government often contradicts itself by discouraging fuel conservation or increasing vehicle maintenance costs or lessening traffic safety while supposedly attempting to create it. Indeed, the "Cash For Clunkers" was such a contradictory mess of a program with largely the aim of helping some auto companies sell more vehicles as the real goal. It was a marketing bonanza for the auto companies, but hardly without negative consequences for society as a whole.


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