Automakers received a boost in August sales fueled by the Cash for Clunkers program. Hyundai (+47%) and Ford (+17%) led the pack, while GM stalled out with a decline of 20%. The net impact of the program was to accelerate future demand into the current quarter, while increasing consumer debt. No question this was a sweet deal for those looking to purchase a car, but how detrimental will this be to sales in succeeding quarters?
For the $3B of taxpayer money spent on this program, the year over year sales comparisons are:
Hyundai: +47%
Ford: +17%
Honda: +10%
Toyota: +6%
Chrysler: -15%
GM: -20%
Interestingly enough, the two largely government owned enterprises performed the worst.
Now let's watch some perfectly good vehicles being destroyed:
Chevy Truck
Corvette
Volvo
Painful to watch, isn't it? I don't think this is what Schumpeter meant by "creative destruction."
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