After a temporary boost in sales won't cash for clunkers hurt the auto companies and other industries?

Your logic is fundamentally flawed, and self-contradictory:

If the economy turns around, there will be many more people who weren't initially planning on buying a car who will now have the means to do so.

Annual new car sales and leases, prior to the recent slump, averaged around 13 to 18 million annually. That's 1 - 1.5 million per month. Even with the additional funds, we're talking about a total of around half a million clunkers that can be traded in. That's half a month or less, not half a year.

Most new car sales aren't because of "need to" as much as "want to" so there is no set number of cars that can be sold, that would be used up. If the economy is good, people will get new cars sooner because they can afford to. If it's bad, they will delay.

If, by your reasoning, only a certain amount of people need cars and will buy it, how do you know that the current sales are coming out of future sales, as opposed to needed purchases that have built up over the past months of below average sales?

As of 2006, there were over 250 million registered passenger vehicles in the USA. Again, we're looking at a drop in the bucket in terms of the number of cars owned, so the auto repair and maintenance industry won't feel ill effects.

Used car prices will NOT skyrocket. Supply and demand? Yes. Who wants to buy a gas-guzzling clunker? No one. There will be a glut of those cars, and their value will go DOWN, as they already have for the SUV market. With people pulling the trigger and buying new cars, wouldn't that mean a lower demand? How can you claim that people buying cars will reduce demand for new cars, but magically would not for used ones?

Car parts prices will go DOWN, not up, because of the second-hand market. Yes, there will be fewer clunkers on the road. That will mean less DEMAND for the existing new parts already made. That also means less demand for used parts. When a clunker needs a part, they don't pull over someone who is driving another clunker and rip needed parts out of that vehicle. Used parts are harvested when cars are put out of commission. There will be a HUGE spike in usable used clunker car parts if all those clunkers are taken out of commission.

This kind of program is what economists say is the most effective type of stimulation program. Try using your pretzel logic on something more arcane, like health care. It might take longer than a single minute to punch holes in your backwards arguments there.

of path the Union would say that. They understand funds for clunkers as a thank you to stay clean of what would otherwise be seen grimy accounting. the government (proprietor of 60% of GE) is giving tax payer funds so as to boost sales of autos. while the autos are bought the sale counts as sales to the automobile business company, however the cost of the low value isn't contemplated on the automobile companies' ledger even however the investment for the two (the automobile business company and funds for Clunkers) comes usually from the comparable source. That way the government can say "look the automobile companies are earning a income under government administration," even however the government in simple terms blew billions in incentives just to get human beings to purchase their autos.

Wrong, wrong. Now, right now is a good time for a recovery. And after the program is over, the auto workers who get re-hired will be able to afford cars, and will. No one wants a car more than the guy who makes them. Cars will not stop getting old or need service because they're new. New car buyers spend on sound, 20s, ridiculous tires, GPS, anything sells. After 3 years, they do oil changes. Insurance companies make more because you can't get a loan w/o comp. Gas sells more because they enjoy driving more. All these bring in tax money so that income tax won't be raised. An all-round success.

At least some of us bottom dwellers are getting a piece of the action first hand. I can't afford a new car at all but for those that can, good for them. What good are the supply of cars sitting in the dealers' lot 'rusting away'? And if the government gave me $4500 I'd only use it to pay off some of my self made debts. Put a 'Dream Catcher' in one hand and $4500 in the other hand and which one do you think will stimulate the economy first?

You have made valid points. The clunkers program is creating artificial demand for new cars and downwardly skewing the supply of used cars.

Of course the US government owns stock in new car companies (GM and Chrysler) but not in used car dealerships. So, is this a way for the government to jack up the value of GM and Chrysler?

Oh my, you really do not see the whole picture, do you?

The auto industry is one piece of the entire recovery plan.

Within it, the cash for clunkers is a portion of that piece.

GM and Ford have restructured, and are retooling their plants to produce energy efficient vehicles. That requires people to do so.

In my state, there is grant money to assist several cities in creating or redesigning their plants for energy efficient parts, as well as to create a training program for those who will be servicing the new vehicles.

There is still a considerable tax break for anyone who buys a new vehicle this year.

There is likely more that I do not know or cannot recall right now. The point is, we have a president who looks at both the here and now and the long-term. Personally, I am relieved.

I have wondered the same thing. I can only guess that after this round of 'cash for clunkers' the automakers will again suffer a sales dropoff, and we may be back to where we started. The only thing that I can see is that 'cash for clunkers' will start to revive people's interest in making large purchases again, but most are still worried about their jobs.

That would be the logical conclusion that sales would drastically fall off since those people able to buy a car would rush to take advantage of the program.

Once that is over, the people who could not afford a new car will have to continue to drive their "clunkers".

It will hurt all companies. They have to pull money out of a successful business to put it in this business.They are robbing peter to pay paul, who voted for them.There is no rise in actual wealth creation.In fact, there is a decrease in actual wealth. Once that money is strained through the nightmare called the federal government, it has even less value.

Yes! Car sales will crash when the program ends. What do we get out of it? 3 billion wasted tax dollars. A billion here and a billion there will soon add up to some real money. Not that the U.S. dollar is real money but that is another topic....