why does production have to increase? the destroyed cars have already been replaced from inventory. Production was ahead of demand. that is kind of the point of the program, isn't it?
All the articles I've read talk about tight inventories and manufacturers rehiring to boost production, at least for the models popular with that program. I don't follow auto inventory, but I would have expected any excess inventory would have been gone for some time now following the layoffs that started months ago. The point of the program was to get those workers back on payroll. Considering the workers would be receiving unemployment otherwise, it makes some sense to have them doing some work in the meantime replacing supposedly less efficient vehicles.
why does production have to increase? the destroyed cars have already been replaced from inventory. Production was ahead of demand. that is kind of the point of the program, isn't it?
All the articles I've read talk about tight inventories and manufacturers rehiring to boost production, at least for the models popular with that program. I don't follow auto inventory, but I would have expected any excess inventory would have been gone for some time now following the layoffs that started months ago. The point of the program was to get those workers back on payroll. Considering the workers would be receiving unemployment otherwise, it makes some sense to have them doing some work in the meantime replacing supposedly less efficient vehicles.
According to this article it looks like what they did was work off the inventories and they are now at what should be a sustainable level - if they are smart.
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Good article DJO. I think it was understood that car makers were originally in trouble partly because of the large unsold inventory they were carrying. Cash for clunkers apparently fixed the overstock problem for now. The part of the situation that I did not fully comprehend before reading the article was the fixed cost labor. Apparently factory workers get paid whether they are actually making product or not. That puts car manufacturers between a rock and a hard place when sales take a dive. Obviously, the pace of production has got to be adjusted relative to sales to maintain "reasonable" inventories. If the auto industry is to avoid slipping into the same overstock problem again, it will have to deal with the pain of adjusting production to match slowing sales, or build cars that Americans are enthusiastic about buying and can afford during the current economic slump.
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Quote from the article:
.........But why not just hold down production? Shut the factories for a few weeks. Reduce inventories to a reasonable number? No, it's not because Detroit wanted to make sure that very car in every color with every option was there waiting for you. We have to credit the calculations of the finance men, particularly at GM, and contracts the company has signed with the United Auto Workers union.
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The contracts guaranteed that the autoworkers would get most of their pay whether they worked or not. The finance men figured that since so many of the costs were now fixed--the labor, the overhead--they should build cars whether they were wanted or not. Perhaps they couldn't be sold at a normal profit, but it would cost almost as much not to build them as to build them. Then the company could get rid of them with deals, incentives or giveaways to rent-a-car companies.
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Another reason for pumping out cars and pushing them on dealers is money. The car companies get paid for the car, not when it is sold to a customer like you, but from the dealers after they get them. The more they build and ship to dealers, the more money comes in, even if the cars sit around for months, even if they force cash back deals, even if they reduce the worth of the product in the customer's minds.......
The borrowing demand forward meme doesn't work because the old cars were destroyed. Production has to increase to replace those.
That makes no sense. If there were 100 old cars on the road, and now there are 100 new cars, it should be obvious we won't be needing quite so many new cars in the near future as we did 3 months ago.
That makes no sense. If there were 100 old cars on the road, and now there are 100 new cars, it should be obvious we won't be needing quite so many new cars in the near future as we did 3 months ago.
The alternative would have been 100 new cars and say 60 of the old cars still on the road. The next month, there are 60 buyers that will have to buy new that would have previously bought the car that was destroyed under clunkers.
Bottom line is the government paid 3K or 4K to buy cars and have the engines destroyed. That part is not borrowing from the future. True, some people bought sooner than they would have otherwise, but they will be matched by people having to buy new down the road that would have not have had to buy new otherwise.
The program hasn't even come close to removing all the excess inventory that domestic automakers currently have...most of the the top sellers were foreign brands. The market is not large enough to support the current number of domestic and foreign automakers without these govt programs.
That makes no sense. If there were 100 old cars on the road, and now there are 100 new cars, it should be obvious we won't be needing quite so many new cars in the near future as we did 3 months ago.
The alternative would have been 100 new cars and say 60 of the old cars still on the road. The next month, there are 60 buyers that will have to buy new that would have previously bought the car that was destroyed under clunkers.
Bottom line is the government paid 3K or 4K to buy cars and have the engines destroyed. That part is not borrowing from the future. True, some people bought sooner than they would have otherwise, but they will be matched by people having to buy new down the road that would have not have had to buy new otherwise.
The alternative without CARS would have been something like 15 new cars on the road and 85 old cars. Still equals 100 though.
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FWIW, the articles linked below, dated December 2008, and January 2009 indicate that the UAW Jobs Bank Program was suspended at the beginning of this year:
UAW agrees to suspend Jobs Bank, Gettelfinger says (3 Dec 08)
. The UAW has agreed to suspend the Jobs Bank program and allow the Detroit 3 to delay making payments to a retiree health care trust in 2010 to help the automakers through their cash crisis, UAW President Ron Gettelfinger said.........
. GM and UAW will drop jobs bank program that paid employees when there was no work (28 Jan 09)
. Starting Monday, General Motors workers will lose their jobs bank, a 25-year-old safety net that pays workers even when factories are closed.....
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So it appears the Forbes article DJO linked above was inaccurate with respect to fixed labor costs, at least as of last January to the present.
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As an aside, UAW benefits like the Jobs Bank Program help explain why U.S. car makers find it difficult to compete with foreign car makers.
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. Toyota closing California plant it ran with GM
. Toyota is shutting the California factory it ran with General Motors for 25 years -- the first time the Japanese automaker is closing a major auto assembly plant ever........
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Shocking Late Breaking News!!! Cash for Clunkers responsible for improved sales figures! Pontiac inventory diminishing fast!
. Ford exec sees US auto sales rising in August
. A top Ford executive expects industrywide U.S. auto sales to rise for the first time in more than two years this month, thanks largely to the government's Cash for Clunkers program.......
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.......Fields (Ford's president of the Americas) estimated about 30 to 40 percent of clunkers sales were "truly incremental," meaning that they came from consumers who had no plans previously to buy a car. The rest, he said, came from people who were going to buy a car later on.
. GM sees US auto sales growing by 2 million in '10
. An executive with General Motors said Friday the company sees U.S. auto sales growing by 2 million next year.
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General Motors Co. Vice President Brent Dewar said GM is projecting U.S. sales of 10.5 million vehicles for 2009 and 12.5 million in 2010 as consumer confidence improves.
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He said August sales for the Chevrolet brand were strong but there will be a payback in September. The government's Cash for Clunkers program definitely pulled sales forward from later in the year......
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......GM likely will sell out its remaining Pontiacs by the end of the year, far faster than projected, Docherty said. GM expected to keep selling Pontiacs until the third quarter of next year, but will be down to only 15,000 or 16,000 by next week.
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And finally, from Time magazine, we have this report about the demo-derby crowd, who feel repressed by the political agenda promoted by the Cash for Clunkers program.
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Article and Video:
. Crash For Clunkers: Demolition Derbies Hard Up for Cars
. There's at least one group of people who are happy Cash for Clunkers is over: demolition-derby drivers. Participants in these events, in which drivers smash into one another until there's only one engine left running, don't enjoy the sight of old cars going out of commission without making a pit stop at the county fairground. "Obama is an anti-demo-derby guy," says Tory Schutte, head of the Demolition Derby Drivers Association. "He's targeting the cars we've been using."......
I talked to a guy the other day whose wife traded in her Jaguar XJS using the clunker program for a VW Beetle. $4500 bucks for a convertible XJS. I know Jags aren't great for maintenance but that is good looking car. I wonder what the guy felt like when he put the glue into the engine!
I talked to a guy the other day whose wife traded in her Jaguar XJS using the clunker program for a VW Beetle. $4500 bucks for a convertible XJS. I know Jags aren't great for maintenance but that is good looking car. I wonder what the guy felt like when he put the glue into the engine!
It may not have even happened. If the car could be sold for more than $4500, the dealer can simply elect not to submit the CFC paperwork to the gov't and treat the car as any other trade-in. Or maybe an employee of the dealership bought the car for $4500. Hard to say.
The reliability joke is too easy, but if the car was a pre-92 I6 model, it's both a clunker and well worth the $4500 to get rid of. A mint V12 model might get $4500, but unlikely unless it's a show-car caliber low-mileage model.
The downside for the husband is that he'll be seen in a VW Beetle now. That's not worth $4500 to me.
If I only own old cars and only drive them on weekends, and work from home during the week, do I cause more or less pollution than someone who buys a new car and drives it 7 days a week?
You've got the worst analogies. If I only ride a 1920s bicycle, and eat one steak a week do I pollute more or less than someone who uses a canoe to go fishing and wears heavy clothes in the summer?
I just wanted to note that this is possibly the funniest thing I've ever read on these forums. The entire thread was incredibly entertaining, but this just made me burst out laughing.
Aaahahah!
Very nicely done.
On topic:
I've never owned anything that would qualify for the tax credit. Even my old 1992 Voyager would probably not qualify - I remember getting solid 24-26 highway mpg in that thing.
There are more shades of gray to this particular stimulus, now over, than the 'first-time' home-buyer tax credit, I think. None of the myriad vehicles I have owned would ever have qualified, so it was irritating to me to see other people getting discounts for decisions they should have made differently in retrospect. OTOH every damn 1990s era Ford Explorer (in fact, I'm no fan of any SUV or crossover, but whatever) that gets dragged off the road and crushed makes me just a tiny bit happier.
So... Couldn't participate. Wife bought a new car only days before the legislation to provide a tax credit for new car purchases, and that error in timing is supremely annoying. Bah. Humbug.
I momentarily considered buying a new car, but even WITH a clunker, I'm glad I did what I ended up doing. I sold my wife's old car (too efficient to qualify, and there's no way I was going to let them put liquid silica in one of Saabs best engines, and destroy a very handsome car) private party, ultimately for quite a bit less than 4500, and bought a 1992 Miata. I have to laugh every time I fill up the tank - it won't even hold ten gallons. I love that the car is so simple and so tiny and uncomplicated. I can fix and/or replace every single component on the vehicle, and augment it with a million aftermarket performance options. It's the perfect car for me. My next car will probably be... another Miata.
Best 3 grand I ever spent. Very, very glad I don't have a new (NC) Miata and a scary car payment. Very glad indeed. First thing I did was to take a drill to the upper shock mounts and put in adjustable Koni Sports.
Not having a warranty or a shiny new paint job to worry about is liberating.
Wow... my 1992 Voyager (I sold it for a grand with 200k on the clock) supposedly got 19 mpg combined - fail. Too efficient (!!).
My 1999 Saab also supposedly got 19 mpg. Yeah, maybe if you lit up the tires at every stoplight. Also fail.
Sadly, these are the two least efficient vehicles I have ever owned. Even my 2006 Grand Caravan gets a combined 20 mpg, and I generally do better than that in real world conditions.
Possibly the most practical and boring vehicles ever, but as a non-daily driver it was a sensible choice.
I notice Chrysler went from 18/25 mpg with my vehicle to 17/24 with the new boxy, ugly as sin redesign - and the same engine driving a more sophisticated powertrain with more speeds. Way to go, Chrysler! The .Cd went all to hell with the latest Caravan. Style over... efficiency. Win. Except the styling sucks. Oh well. Fail.
WestSideBilly, all of the problems you mention with the concept of a fully-automated highway system can be worked out over time. Difficult technical challenges will be solved, costs will come down, and piece-by-piece, the system will come into place.
I never said it would happen quickly. I wouldn't be surprised to see it in my lifetime, but I'm not necessarily expecting that we'll get there in the next 75 years.
I am an electrical engineer though, so I probably tend to have a fairly optimistic view of what's achievable through dedication and applied brainpower, given enough time.
Funny, I'm a mechanical engineer turned programmer, and I have a very pessimistic view of what's achievable by our pathetic monkey brains. Increasing complexity has NOT led to better and more reliable systems, in fact, often the opposite has been the case.
Consider the complexity of the system used in the Apollo program - light years ago in CS terms, yet still functional enough to land someone on the lunar surface.
From 1996 Yorktown was used as the testbed for the Navy's Smart Ship program. The ship was equipped with a network of 27 dual 200 MHz Pentium Pro based machines running Windows NT 4.0 communicating over fiber-optic cable with a Pentium Pro based server. This network was responsible for running the integrated control center on the bridge, monitoring condition assessment, damage control, machinery control and fuel control, monitoring the engines and navigating the ship. This system was estimated to save $2.8 million per year by reducing the ship's complement by 10%.
On September 21, 1997, while on maneuvers off the coast of Cape Charles, Virginia, a crew member entered a zero into a database field causing a divide by zero error in the ship's Remote Data Base Manager which brought down all the machines on the network, causing the ship's propulsion system to fail.
I don't even want traction control in my cars. I like ABS - in my wife's vehicles, and in the minivan.
The day I hand over the keys of my car to Microsoft (or, worse, Google) will be the day I stop buying new cars forever.
There IS a remarkably functional transit system with an embedded guidance system, and it's been available for hundreds and hundreds of years. I understand and appreciate the reasons Americans hate mass transit, but sadly, it's simply too efficient and cost-effective to just go away. Darn.
As one last data point, consider the bizarre and tragic case of Gol Flight 1907, which crashed in the Brazilian jungle killing all on board, after a collision course was assigned to an executive jet traveling the same route northbound:
This accident could NOT have happened without the incredible accuracy of modern autopilot equipment. Apparently, the complex digital flight deck of the new executive jet was at fault when the transponder (critical for TCAS to function) was inadvertently switched off, without the pilots realization.
Increasing complexity has NOT led to better and more reliable systems, in fact, often the opposite has been the case.
Really? Perhaps you still run Windows 95, then. Because it's simpler and thus more reliable. Likewise, you stick with only automobiles running sterling engines, and preferably those with unrefined fuels like coal or wood chips.
People are capable of producing breathtakingly complex solutions to problems with amazing reliability (the 1960s space program is a great example if viewed from the eyes of any prior generation) as well as producing buggy and nonfunctional solutions to straight forward problems (the original Tacoma Narrows Bridge). What generally matters is the each problem is decomposed properly and that each subproblem be solved with a reliable/proven system.
There's really no reason to believe we won't have self-driving cars during our lifetimes (even if you're nearing retirement), but then there's no reason to be sure we'll even be driving cars at that time. With regards to your examples of how similar technology has failed, please consider that automobile accidents are the leading cause of death in this country for everyone under the age of 55 (or until heart disease starts working its mojo). People are, generally speaking, just terrible drivers.
Increasing complexity has NOT led to better and more reliable systems, in fact, often the opposite has been the case.
Really? Perhaps you still run Windows 95, then. Because it's simpler and thus more reliable. Likewise, you stick with only automobiles running sterling engines, and preferably those with unrefined fuels like coal or wood chips.
Windows 95 was hardly a model of simplicity. A bunch of graphics slapped on top of the still-born DOS 7? <shiver>
No, I run XP with all the graphical whiz-bang crap turned off on my workstations, Debian on my servers. I'm sure I'll migrate to Windows 7 at some point when I feel motivated, but I won't touch Vista or allow my clients to use it.
Perhaps you're confusing me with some other luddite. :P
I'm not anti-technology, just against needless complexity and 'features' designed only to sell a product based on appearance.
My first car had a rotary engine. And, yes, I bought it because of that powerplant.
People are capable of producing breathtakingly complex solutions to problems with amazing reliability (the 1960s space program is a great example if viewed from the eyes of any prior generation) as well as producing buggy and nonfunctional solutions to straight forward problems (the original Tacoma Narrows Bridge). What generally matters is the each problem is decomposed properly and that each subproblem be solved with a reliable/proven system.
Now, why would you want to break a large, complex task into many small, simple ones?
The original Narrows bridge failed because it was too simple. They failed to take into account external factors. Fail. We now have some old-fashioned, well proven classic suspension bridges in it's place.
There's really no reason to believe we won't have self-driving cars during our lifetimes (even if you're nearing retirement), but then there's no reason to be sure we'll even be driving cars at that time. With regards to your examples of how similar technology has failed, please consider that automobile accidents are the leading cause of death in this country for everyone under the age of 55 (or until heart disease starts working its mojo). People are, generally speaking, just terrible drivers.
I completely agree with that last statement.
So you look to humans to solve the human problem... with machines? What would be wrong with simply requiring a higher standard for driver licensing? Oh, I know some people would never manage to pass their drivers test, and I feel so bad for them.
I love to drive. I am as infatuated with the automobile as anyone I know - in fact, more so than anyone I know. I love cars. So, why would I ever want to hand over control of the machine to another machine?
If you're simply using your car as a means to get somewhere, and hate the actual process, why do you even want a car at all? Oh, I know, sharing a transportation module with other humans is yucky. But at least you don't have to drive.
The mortality rate in other westernized countries is approximately 1/3 that of the United States. http://www.driveandstayalive.com/info%2 ... a-2004.htm
That is the per capita-rate of accident fatalities, which obviously is going to be higher in a country where more people drive, drive farther, and drive more often. The VMT/VKmT figure for the USA is more in the middle of the pack, and if those numbers include public transportation, then countries with higher rates of use of buses and trains are going to see lower rates of fatalities, unless the average person drives like a bus driver.
I love to drive. I am as infatuated with the automobile as anyone I know - in fact, more so than anyone I know. I love cars. So, why would I ever want to hand over control of the machine to another machine?
Finally, the honest explanation for your umbrage. Why not just start with that statement. Then you don't have to make any of the other illogical ones.
So you look to humans to solve the human problem... with machines? What would be wrong with simply requiring a higher standard for driver licensing? Oh, I know some people would never manage to pass their drivers test, and I feel so bad for them.
This is so confused. Just to prove it, here's your argument right back along with the rhetorical question. Why even have cars? So you look to humans (engineers) to solve the human problem (of transportation)... with machines(automobiles)?
Yes, we do actually look to humans to solve human problems with machines. It's called being efficient. Humans excel, relatively speaking, at solving a problem the first time, but they are notoriously awful at performing rote tasks. If the problem is a) tedious b) requires high accuracy c) replicable and d) economically feasible, then it is always preferable to automate that problem. We can all agree on B and C with regards to driving. D is obviously going to have to be in the future as it is not yet viable. So, we're really only quibbling over A. Fair enough, but let's keep the argument there instead of following your red herrings.
Also, no you can't just use better tests. I'm sure it would reduce fatalities to get the worst drivers off the road, but humans still have limitations. Even good drivers, like me and presumably you, do not always operate at peak performance. If you ever drive with sleep deprivation, you are statistically as dangerous as a drunk driver.
I love to drive. I am as infatuated with the automobile as anyone I know - in fact, more so than anyone I know. I love cars. So, why would I ever want to hand over control of the machine to another machine?
Finally, the honest explanation for your umbrage. Why not just start with that statement. Then you don't have to make any of the other illogical ones.
I get tired of repeating myself?
I never mentioned that I like cars before? Hmmm. Are you sure? Remember me talking about buying an OLDER car because modern cars are already overcomplicated unfixable appliances? Going away from an automatic drivetrain? Well. Now I have to re-read my own posts. You have made me doubt myself!
So you look to humans to solve the human problem... with machines? What would be wrong with simply requiring a higher standard for driver licensing? Oh, I know some people would never manage to pass their drivers test, and I feel so bad for them.
This is so confused. Just to prove it, here's your argument right back along with the rhetorical question. Why even have cars? So you look to humans (engineers) to solve the human problem (of transportation)... with machines(automobiles)?
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Ah! I knew if I prodded you enough, you'd turn into PublicEnemy#1. Where is he/it anyway? Except you're the anti-Luddite.
We have cars because consumers loved them. They solve the last-mile problem of public transportation. In this largely undeveloped nation they offered unbelievable mobility. We quickly figured out how to store them in our houses so we'd never even have to step outside.
We want two different kinds of cars, you and I.
I'm curious, will your hypothetical smart vehicle be able to drive me up to Mt. Baker, after a heavy snowfall, hands-free? Really?
What about forestry service roads that are washed out every year?
Yes, we do actually look to humans to solve human problems with machines. It's called being efficient. Humans excel, relatively speaking, at solving a problem the first time, but they are notoriously awful at performing rote tasks. If the problem is a) tedious b) requires high accuracy c) replicable and d) economically feasible, then it is always preferable to automate that problem. We can all agree on B and C with regards to driving. D is obviously going to have to be in the future as it is not yet viable. So, we're really only quibbling over A. Fair enough, but let's keep the argument there instead of following your red herrings.
I'll agree on B and C, but I'm not just quibbling over A.
We can agree to disagree on A - I can leave it alone. You find driving tedious. I do not. Fair enough. Plenty of people find driving tedious. If I were driving an appliance on any of the major highways around here on a regular basis, I might find it tedious too.
So, let's leave A alone.
I am not of the opinion that a self-guiding car is ultimately unfeasible. I don't think driving situations are all replicable - C. I have been following the DARPA 'smart' (hehe) car challenge for three years. The progress that has been made is amazing, after a seriously rocky start.
The first set of cars couldn't even navigate desert roads. The newest ones freak out over a traffic cone, but they're much better. You know how they've made them better? By integrating more and more systems of a greater and greater complexity into the vehicle.
Fact is, as stupid as humans are, they are going to have to cram a stupendous amount of switches and software into the vehicle - ultimately the equivalent of a human driver, but with the infallibility (!!) of a machine.
I just don't want one. I think this negates the fundamental property of the automobile - the ability to take it's owner virtually ANYWHERE regardless of pre-programmed paths.
If your path is predetermined, why do you even need a car? That's what I'm quibbling about. We've solved the problem of self-guiding transportation. Autonomous trams are de riguer. So...
Also, no you can't just use better tests. I'm sure it would reduce fatalities to get the worst drivers off the road, but humans still have limitations. Even good drivers, like me and presumably you, do not always operate at peak performance. If you ever drive with sleep deprivation, you are statistically as dangerous as a drunk driver.
Or someone on a cellphone.
I'm perfectly willing to accept that I don't always operate at peak performance while driving. That's because I'm a human, and fallible.
But what about machines? When the first human is killed because of an automated, self-driving car - and it WILL happen, if you have your way - then on who will you place the blame? The programmers? You're going to lay the blame on the machine? Or the humans that made it?
Where's Mr. RAA when you need him?
Cars do fail in spectacular ways because of engineering or manufacturing mistakes already. It's better than it used to be. I don't think a 'smart' car will be any different. It'll just be way, way more complicated than cars are already, and they're pretty damn complicated. We have off-road vehicles with drive-by-wire throttles. That's progress!
I like cars and driving as much as you do, but I would still greatly prefer to have automated highways in congested urban areas. Driving from Seattle to Tacoma at 3pm? Have fun with that, I'd rather read a book. And I'd rather have soccer mom focused on her obnoxious rugrats and leave the driving to someone/thing actually paying attention.
I don't think automated highways will ever be universal. Every model of automation I've heard of is exclusively for urban areas with heavy traffic and major restricted access freeways. As soon as you get off of I-5 in Bellingham, you're on your own up to Mt Baker.
I won't quote most of your retort, because it summarizes to "if I can't steer it, I don't want it". I think you're putting an argument into my mouth I never made. I think cars will still have controls allowing the humans inside to alter speed or direction of the car manually for a long time. What you'll see, is all the mechanical control you are familiar with will be replaced with electronic controls (electronic steering wheel sends signals to steer motors, electronic break sends signals to brake motors, etc), and machine control will be able to access those same electronic controls the human can. The machine will just be a little faster at it when enabled.
In fact, I would wager the first versions of machine control will only function on roads designed for it, and initially it will be mostly limited to freeways. Pull on the freeway, get up to speed, hit the auto switch, and sit back until a buzzer warns you that your exit approaches and it's time to retake control.
Fact is, as stupid as humans are, they are going to have to cram a stupendous amount of switches and software into the vehicle - ultimately the equivalent of a human driver, but with the infallibility (!!) of a machine.
Humans are incredibly mind-bendingly smart. The stupidest one you've ever heard of is still incredibly smart; and complex, too! You simply must end this machine-equals-fallible or complex-equals-bad argument. Humans are suboptimal drivers because they have slow reaction times and because they lose focus. It's similar to why humans are poor calculators - they lose focus and cannot retain very many numbers in their head at a time.
Two completely awful cars destroyed in the name of science.
You're confusing me with someone else with the luddite / big Detroit iron love. I'm all about crumple zones and modern 'safety cell' construction. I have never even owned an American car, come to think of it.
I'd like to see a Smart car go up against the 50's behemoth. I think it'd more than hold its own.
I'd like to see a Smart car go up against the 50's behemoth. I think it'd more than hold its own.
Scratch that. Looked at some crash tests for the Smart car... it's just lacking in, well, substance. It's a tough little car, but there's nothing to it.
Two completely awful cars destroyed in the name of science.
You're confusing me with someone else with the luddite / big Detroit iron love. I'm all about crumple zones and modern 'safety cell' construction. I have never even owned an American car, come to think of it.
Some pages back there was a couple of guys arguing that their 50s big-iron cars were safer than today's cars, essentially because they had thicker sheet metal.
Comments
All the articles I've read talk about tight inventories and manufacturers rehiring to boost production, at least for the models popular with that program. I don't follow auto inventory, but I would have expected any excess inventory would have been gone for some time now following the layoffs that started months ago. The point of the program was to get those workers back on payroll. Considering the workers would be receiving unemployment otherwise, it makes some sense to have them doing some work in the meantime replacing supposedly less efficient vehicles.
Latest in Stimulus: 'Cash for Refrigerators'
According to this article it looks like what they did was work off the inventories and they are now at what should be a sustainable level - if they are smart.
http://www.forbes.com/2009/08/24/autos- ... river.html
Good article DJO. I think it was understood that car makers were originally in trouble partly because of the large unsold inventory they were carrying. Cash for clunkers apparently fixed the overstock problem for now. The part of the situation that I did not fully comprehend before reading the article was the fixed cost labor. Apparently factory workers get paid whether they are actually making product or not. That puts car manufacturers between a rock and a hard place when sales take a dive. Obviously, the pace of production has got to be adjusted relative to sales to maintain "reasonable" inventories. If the auto industry is to avoid slipping into the same overstock problem again, it will have to deal with the pain of adjusting production to match slowing sales, or build cars that Americans are enthusiastic about buying and can afford during the current economic slump.
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Quote from the article:
.........But why not just hold down production? Shut the factories for a few weeks. Reduce inventories to a reasonable number? No, it's not because Detroit wanted to make sure that very car in every color with every option was there waiting for you. We have to credit the calculations of the finance men, particularly at GM, and contracts the company has signed with the United Auto Workers union.
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The contracts guaranteed that the autoworkers would get most of their pay whether they worked or not. The finance men figured that since so many of the costs were now fixed--the labor, the overhead--they should build cars whether they were wanted or not. Perhaps they couldn't be sold at a normal profit, but it would cost almost as much not to build them as to build them. Then the company could get rid of them with deals, incentives or giveaways to rent-a-car companies.
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Another reason for pumping out cars and pushing them on dealers is money. The car companies get paid for the car, not when it is sold to a customer like you, but from the dealers after they get them. The more they build and ship to dealers, the more money comes in, even if the cars sit around for months, even if they force cash back deals, even if they reduce the worth of the product in the customer's minds.......
That makes no sense. If there were 100 old cars on the road, and now there are 100 new cars, it should be obvious we won't be needing quite so many new cars in the near future as we did 3 months ago.
The alternative would have been 100 new cars and say 60 of the old cars still on the road. The next month, there are 60 buyers that will have to buy new that would have previously bought the car that was destroyed under clunkers.
Bottom line is the government paid 3K or 4K to buy cars and have the engines destroyed. That part is not borrowing from the future. True, some people bought sooner than they would have otherwise, but they will be matched by people having to buy new down the road that would have not have had to buy new otherwise.
The program hasn't even come close to removing all the excess inventory that domestic automakers currently have...most of the the top sellers were foreign brands. The market is not large enough to support the current number of domestic and foreign automakers without these govt programs.
The alternative without CARS would have been something like 15 new cars on the road and 85 old cars. Still equals 100 though.
FWIW, the articles linked below, dated December 2008, and January 2009 indicate that the UAW Jobs Bank Program was suspended at the beginning of this year:
UAW agrees to suspend Jobs Bank, Gettelfinger says (3 Dec 08)
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The UAW has agreed to suspend the Jobs Bank program and allow the Detroit 3 to delay making payments to a retiree health care trust in 2010 to help the automakers through their cash crisis, UAW President Ron Gettelfinger said.........
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GM and UAW will drop jobs bank program that paid employees when there was no work (28 Jan 09)
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Starting Monday, General Motors workers will lose their jobs bank, a 25-year-old safety net that pays workers even when factories are closed.....
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So it appears the Forbes article DJO linked above was inaccurate with respect to fixed labor costs, at least as of last January to the present.
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As an aside, UAW benefits like the Jobs Bank Program help explain why U.S. car makers find it difficult to compete with foreign car makers.
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Toyota closing California plant it ran with GM
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Toyota is shutting the California factory it ran with General Motors for 25 years -- the first time the Japanese automaker is closing a major auto assembly plant ever........
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Shocking Late Breaking News!!! Cash for Clunkers responsible for improved sales figures! Pontiac inventory diminishing fast!
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Ford exec sees US auto sales rising in August
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A top Ford executive expects industrywide U.S. auto sales to rise for the first time in more than two years this month, thanks largely to the government's Cash for Clunkers program.......
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.......Fields (Ford's president of the Americas) estimated about 30 to 40 percent of clunkers sales were "truly incremental," meaning that they came from consumers who had no plans previously to buy a car. The rest, he said, came from people who were going to buy a car later on.
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GM sees US auto sales growing by 2 million in '10
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An executive with General Motors said Friday the company sees U.S. auto sales growing by 2 million next year.
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General Motors Co. Vice President Brent Dewar said GM is projecting U.S. sales of 10.5 million vehicles for 2009 and 12.5 million in 2010 as consumer confidence improves.
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He said August sales for the Chevrolet brand were strong but there will be a payback in September. The government's Cash for Clunkers program definitely pulled sales forward from later in the year......
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......GM likely will sell out its remaining Pontiacs by the end of the year, far faster than projected, Docherty said. GM expected to keep selling Pontiacs until the third quarter of next year, but will be down to only 15,000 or 16,000 by next week.
GM has stopped making the Pontiac.
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And finally, from Time magazine, we have this report about the demo-derby crowd, who feel repressed by the political agenda promoted by the Cash for Clunkers program.
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Article and Video:
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Crash For Clunkers: Demolition Derbies Hard Up for Cars
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There's at least one group of people who are happy Cash for Clunkers is over: demolition-derby drivers. Participants in these events, in which drivers smash into one another until there's only one engine left running, don't enjoy the sight of old cars going out of commission without making a pit stop at the county fairground. "Obama is an anti-demo-derby guy," says Tory Schutte, head of the Demolition Derby Drivers Association. "He's targeting the cars we've been using."......
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Demolition Derby: Crash for Clunkers
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. . . . must . . . . resist . . . . Jaguar . . . . reliability joke . . . . grrrr . . .
The downside for the husband is that he'll be seen in a VW Beetle now. That's not worth $4500 to me.
I just wanted to note that this is possibly the funniest thing I've ever read on these forums. The entire thread was incredibly entertaining, but this just made me burst out laughing.
Aaahahah!
Very nicely done.
On topic:
I've never owned anything that would qualify for the tax credit. Even my old 1992 Voyager would probably not qualify - I remember getting solid 24-26 highway mpg in that thing.
There are more shades of gray to this particular stimulus, now over, than the 'first-time' home-buyer tax credit, I think. None of the myriad vehicles I have owned would ever have qualified, so it was irritating to me to see other people getting discounts for decisions they should have made differently in retrospect. OTOH every damn 1990s era Ford Explorer (in fact, I'm no fan of any SUV or crossover, but whatever) that gets dragged off the road and crushed makes me just a tiny bit happier.
So... Couldn't participate. Wife bought a new car only days before the legislation to provide a tax credit for new car purchases, and that error in timing is supremely annoying. Bah. Humbug.
I momentarily considered buying a new car, but even WITH a clunker, I'm glad I did what I ended up doing. I sold my wife's old car (too efficient to qualify, and there's no way I was going to let them put liquid silica in one of Saabs best engines, and destroy a very handsome car) private party, ultimately for quite a bit less than 4500, and bought a 1992 Miata. I have to laugh every time I fill up the tank - it won't even hold ten gallons. I love that the car is so simple and so tiny and uncomplicated. I can fix and/or replace every single component on the vehicle, and augment it with a million aftermarket performance options. It's the perfect car for me. My next car will probably be... another Miata.
Best 3 grand I ever spent. Very, very glad I don't have a new (NC) Miata and a scary car payment. Very glad indeed. First thing I did was to take a drill to the upper shock mounts and put in adjustable Koni Sports.
Not having a warranty or a shiny new paint job to worry about is liberating.
My 1999 Saab also supposedly got 19 mpg. Yeah, maybe if you lit up the tires at every stoplight. Also fail.
Sadly, these are the two least efficient vehicles I have ever owned. Even my 2006 Grand Caravan gets a combined 20 mpg, and I generally do better than that in real world conditions.
Possibly the most practical and boring vehicles ever, but as a non-daily driver it was a sensible choice.
I notice Chrysler went from 18/25 mpg with my vehicle to 17/24 with the new boxy, ugly as sin redesign - and the same engine driving a more sophisticated powertrain with more speeds. Way to go, Chrysler! The .Cd went all to hell with the latest Caravan. Style over... efficiency. Win. Except the styling sucks. Oh well. Fail.
Funny, I'm a mechanical engineer turned programmer, and I have a very pessimistic view of what's achievable by our pathetic monkey brains. Increasing complexity has NOT led to better and more reliable systems, in fact, often the opposite has been the case.
Consider the complexity of the system used in the Apollo program - light years ago in CS terms, yet still functional enough to land someone on the lunar surface.
http://en.wikipedia.org/wiki/Apollo_PGNCS
Despite it's impressive technical specs and proven performance, the margin for error in space is actually fairly high, once you are in orbit.
Then consider the sad case of the USS Yorktown:
http://en.wikipedia.org/wiki/USS_Yorktown_%28CG-48%29
I don't even want traction control in my cars. I like ABS - in my wife's vehicles, and in the minivan.
The day I hand over the keys of my car to Microsoft (or, worse, Google) will be the day I stop buying new cars forever.
There IS a remarkably functional transit system with an embedded guidance system, and it's been available for hundreds and hundreds of years. I understand and appreciate the reasons Americans hate mass transit, but sadly, it's simply too efficient and cost-effective to just go away. Darn.
As one last data point, consider the bizarre and tragic case of Gol Flight 1907, which crashed in the Brazilian jungle killing all on board, after a collision course was assigned to an executive jet traveling the same route northbound:
http://en.wikipedia.org/wiki/Gol_Transp ... light_1907
This accident could NOT have happened without the incredible accuracy of modern autopilot equipment. Apparently, the complex digital flight deck of the new executive jet was at fault when the transponder (critical for TCAS to function) was inadvertently switched off, without the pilots realization.
Still optimistic?
I'm not.
Really? Perhaps you still run Windows 95, then. Because it's simpler and thus more reliable. Likewise, you stick with only automobiles running sterling engines, and preferably those with unrefined fuels like coal or wood chips.
People are capable of producing breathtakingly complex solutions to problems with amazing reliability (the 1960s space program is a great example if viewed from the eyes of any prior generation) as well as producing buggy and nonfunctional solutions to straight forward problems (the original Tacoma Narrows Bridge). What generally matters is the each problem is decomposed properly and that each subproblem be solved with a reliable/proven system.
There's really no reason to believe we won't have self-driving cars during our lifetimes (even if you're nearing retirement), but then there's no reason to be sure we'll even be driving cars at that time. With regards to your examples of how similar technology has failed, please consider that automobile accidents are the leading cause of death in this country for everyone under the age of 55 (or until heart disease starts working its mojo). People are, generally speaking, just terrible drivers.
Windows 95 was hardly a model of simplicity. A bunch of graphics slapped on top of the still-born DOS 7? <shiver>
No, I run XP with all the graphical whiz-bang crap turned off on my workstations, Debian on my servers. I'm sure I'll migrate to Windows 7 at some point when I feel motivated, but I won't touch Vista or allow my clients to use it.
Perhaps you're confusing me with some other luddite. :P
I'm not anti-technology, just against needless complexity and 'features' designed only to sell a product based on appearance.
My first car had a rotary engine. And, yes, I bought it because of that powerplant.
Now, why would you want to break a large, complex task into many small, simple ones?
The original Narrows bridge failed because it was too simple. They failed to take into account external factors. Fail. We now have some old-fashioned, well proven classic suspension bridges in it's place.
I completely agree with that last statement.
So you look to humans to solve the human problem... with machines? What would be wrong with simply requiring a higher standard for driver licensing? Oh, I know some people would never manage to pass their drivers test, and I feel so bad for them.
The mortality rate in other westernized countries is approximately 1/3 that of the United States.
http://www.driveandstayalive.com/info%2 ... a-2004.htm
Scroll down... keep scrolling... There we are!
I love to drive. I am as infatuated with the automobile as anyone I know - in fact, more so than anyone I know. I love cars. So, why would I ever want to hand over control of the machine to another machine?
If you're simply using your car as a means to get somewhere, and hate the actual process, why do you even want a car at all? Oh, I know, sharing a transportation module with other humans is yucky. But at least you don't have to drive.
And for some people, that'd be a real blessing.
That is the per capita-rate of accident fatalities, which obviously is going to be higher in a country where more people drive, drive farther, and drive more often. The VMT/VKmT figure for the USA is more in the middle of the pack, and if those numbers include public transportation, then countries with higher rates of use of buses and trains are going to see lower rates of fatalities, unless the average person drives like a bus driver.
Finally, the honest explanation for your umbrage. Why not just start with that statement. Then you don't have to make any of the other illogical ones.
This is so confused. Just to prove it, here's your argument right back along with the rhetorical question. Why even have cars? So you look to humans (engineers) to solve the human problem (of transportation)... with machines(automobiles)?
Yes, we do actually look to humans to solve human problems with machines. It's called being efficient. Humans excel, relatively speaking, at solving a problem the first time, but they are notoriously awful at performing rote tasks. If the problem is a) tedious b) requires high accuracy c) replicable and d) economically feasible, then it is always preferable to automate that problem. We can all agree on B and C with regards to driving. D is obviously going to have to be in the future as it is not yet viable. So, we're really only quibbling over A. Fair enough, but let's keep the argument there instead of following your red herrings.
Also, no you can't just use better tests. I'm sure it would reduce fatalities to get the worst drivers off the road, but humans still have limitations. Even good drivers, like me and presumably you, do not always operate at peak performance. If you ever drive with sleep deprivation, you are statistically as dangerous as a drunk driver.
I get tired of repeating myself?
I never mentioned that I like cars before? Hmmm. Are you sure? Remember me talking about buying an OLDER car because modern cars are already overcomplicated unfixable appliances? Going away from an automatic drivetrain? Well. Now I have to re-read my own posts. You have made me doubt myself!
This is so confused. Just to prove it, here's your argument right back along with the rhetorical question. Why even have cars? So you look to humans (engineers) to solve the human problem (of transportation)... with machines(automobiles)?
[/quote]
Ah! I knew if I prodded you enough, you'd turn into PublicEnemy#1. Where is he/it anyway? Except you're the anti-Luddite.
We have cars because consumers loved them. They solve the last-mile problem of public transportation. In this largely undeveloped nation they offered unbelievable mobility. We quickly figured out how to store them in our houses so we'd never even have to step outside.
We want two different kinds of cars, you and I.
I'm curious, will your hypothetical smart vehicle be able to drive me up to Mt. Baker, after a heavy snowfall, hands-free? Really?
What about forestry service roads that are washed out every year? I'll agree on B and C, but I'm not just quibbling over A.
We can agree to disagree on A - I can leave it alone. You find driving tedious. I do not. Fair enough. Plenty of people find driving tedious. If I were driving an appliance on any of the major highways around here on a regular basis, I might find it tedious too.
So, let's leave A alone.
I am not of the opinion that a self-guiding car is ultimately unfeasible. I don't think driving situations are all replicable - C. I have been following the DARPA 'smart' (hehe) car challenge for three years. The progress that has been made is amazing, after a seriously rocky start.
http://www.xconomy.com/2007/09/04/mit-p ... challenge/
The first set of cars couldn't even navigate desert roads. The newest ones freak out over a traffic cone, but they're much better. You know how they've made them better? By integrating more and more systems of a greater and greater complexity into the vehicle.
Fact is, as stupid as humans are, they are going to have to cram a stupendous amount of switches and software into the vehicle - ultimately the equivalent of a human driver, but with the infallibility (!!) of a machine.
I just don't want one. I think this negates the fundamental property of the automobile - the ability to take it's owner virtually ANYWHERE regardless of pre-programmed paths.
If your path is predetermined, why do you even need a car? That's what I'm quibbling about. We've solved the problem of self-guiding transportation. Autonomous trams are de riguer. So...
Or someone on a cellphone.
I'm perfectly willing to accept that I don't always operate at peak performance while driving. That's because I'm a human, and fallible.
But what about machines? When the first human is killed because of an automated, self-driving car - and it WILL happen, if you have your way - then on who will you place the blame? The programmers? You're going to lay the blame on the machine? Or the humans that made it?
Where's Mr. RAA when you need him?
Cars do fail in spectacular ways because of engineering or manufacturing mistakes already. It's better than it used to be. I don't think a 'smart' car will be any different. It'll just be way, way more complicated than cars are already, and they're pretty damn complicated. We have off-road vehicles with drive-by-wire throttles. That's progress!
Enjoy your toaster.
I don't think automated highways will ever be universal. Every model of automation I've heard of is exclusively for urban areas with heavy traffic and major restricted access freeways. As soon as you get off of I-5 in Bellingham, you're on your own up to Mt Baker.
In fact, I would wager the first versions of machine control will only function on roads designed for it, and initially it will be mostly limited to freeways. Pull on the freeway, get up to speed, hit the auto switch, and sit back until a buzzer warns you that your exit approaches and it's time to retake control.
Humans are incredibly mind-bendingly smart. The stupidest one you've ever heard of is still incredibly smart; and complex, too! You simply must end this machine-equals-fallible or complex-equals-bad argument. Humans are suboptimal drivers because they have slow reaction times and because they lose focus. It's similar to why humans are poor calculators - they lose focus and cannot retain very many numbers in their head at a time.
http://www.youtube.com/watch?v=5CU-k0XmLUk
Enjoy your big-iron death traps.
Oh, that was great!
Two completely awful cars destroyed in the name of science.
You're confusing me with someone else with the luddite / big Detroit iron love. I'm all about crumple zones and modern 'safety cell' construction. I have never even owned an American car, come to think of it.
I'd like to see a Smart car go up against the 50's behemoth. I think it'd more than hold its own.
Scratch that. Looked at some crash tests for the Smart car... it's just lacking in, well, substance. It's a tough little car, but there's nothing to it.
Still think they look completely absurd.
Some pages back there was a couple of guys arguing that their 50s big-iron cars were safer than today's cars, essentially because they had thicker sheet metal.
Wow! That video really makes it's point! Too bad they had to destroy that '59 Chevy though.