Cash For Clunkers A 'Success' At Exposing Continued Decay at Bailed-Out GM and Chrysler
Julia Seymour, Kyle Drennen, and several others at NewsBusters have done a great job (here and here, here, and here, just for starters) exposing the establishment media's rush to characterize the government's Car Allowance Rebate System (CARS) program, commonly known as "Cash for Clunkers" program, a success. This media meme has persisted despite processing snafus, slow payments to dealers, dealer opt-outs, market distortions, and less than perfect disclosure of sales and income tax consequences to buyers.
Of course, as far as the media's cheerleaders are concerned, the problems have made the program not a case study in bureaucratic weakness, but instead "a victim of its own success."
But Cash for Clunkers has indeed been an unqualified success in one important sense I don't expect the media will be too keen on reporting. The program's results have exposed just how weak the market positions of bailed-out General Motors and Chrysler really are.
Top 10 New Vehicles Purchased --
1. Toyota Corolla
2. Honda Civic
3. Toyota Camry
4. Ford Focus FWD
5. Hyundai Elantra
6. Nissan Versa
7. Toyota Prius
8. Honda Accord
9. Honda Fit
10. Ford Escape FWD
Share of New Vehicles Sold Under the Program (only first eight listed) --
- Toyota 19.4%
- General Motors 17.6%
- Ford 14.4%
- Honda 13.0%
- Nissan 8.7%
- Hyundai 7.2%
- Chrysler 6.6%
- Kia 4.3%
You'll note that GM and Chrysler were each shut out of the top ten list.
Additionally, GM's and Chrysler's share of Clunker-related sales of 17.6% and 6.6% above are significantly lower than their market shares of 18.8% and 8.9%, respectively, during July.
While it's true that Ford's Clunker share was 1.5% lower than its July market share, Edmunds called Ford one of the two big Cash for Clunkers winners in a press release today -- and look at what Edmunds is predicting for August vehicle sales by brand:
Here's what Edmunds reported about the program's winners and losers:
"Hyundai and Ford were the biggest winners in the Cash for Clunkers contest, experiencing significant growth in August sales compared with a year ago," said Edmunds.com Senior Analyst Michelle Krebs, whose analysis of Edmunds.com's August sales forecast can be found on AutoObserver.com. "This is likely to be a record month for Hyundai, beating their prior sales record by a mile — maybe as much as 40 percent."
"In contrast, some automakers couldn't really make Cash for Clunkers work for them, and their August sales suffered as a result," Krebs noted, "Chrysler and GM — both hurt by extended factory shutdowns during their Chapter 11 proceedings — had limited inventory to feed Cash for Clunkers, while high-end automakers didn't have the right products for these buyers."
Given the extraordinarily high levels of unsold vehicles GM and Chrysler had on hand earlier this year, I'm not sure that Ms. Krebs's claim about "limited inventory" holds up, even with the extended shutdowns cited. But even if it does, why wouldn't the geniuses who fashion themselves as "car czars" have done something about the impending shortage in advance?
The big story in vehicle sales ever since the bailouts of GM and Chrysler commenced in December of last year has been how those two companies have consistently lost market share ever since. The press has almost dogmatically refused to consider the possibility that consumers continue to shun now state-controlled GM and shotgun-wedded Chrysler because they refuse to do business with bailed-out companies that gobbled up tens of billions of dollars of taxpayer money, running roughshod over disfavored classes of creditors and violating long-established principles of contract law in the process. Even if the avoidance in some cases isn't ideologically based, but instead revolves around warranty and other concerns, lost sales are lost sales.
The press continues to ignore the ever more obvious shunning of the bailed-out. That doesn't mean it isn't happening.
Cross-posted at BizzyBlog.com.