Skip to comments.[Car Dealer] to 0bama: Offer $5K Vouchers for New Car Purchases
Posted on 02/08/2009 6:45:17 AM PST by Diana in Wisconsin
As auto sales nationwide continue to dwindle, a Wisconsin auto dealer has offered a solution to boost demand and revive the flailing U.S. auto industry: $5,000 government discounts.
John Bergstrom, CEO of Bergstrom Automotive based in Neenah, Wis., wrote a letter to President Barack Obama late last week suggesting that everyone who purchased a new vehicle in America, no matter where it was built, be given a government voucher for $5,000 during a 90-day period from Feb. 15 to May 15.
The manufacturer would match that with another $5,000 voucher, meaning buyers would get a $10,000 discount under Bergstrom's proposal.
"If the government, the manufacturers, the financial institutions, and the dealers all work together, we could give our economy a huge positive jolt," Bergstrom wrote. "Together we could get this industry rolling again in a hurry."
Bergstrom's plan also assumes dealers would agree to sell the vehicle at invoice pricing, and financial institutions would finance credit-worthy buyers with 72-month loan at a 5 percent interest rate.
The plan could eliminate the stranglehold inventories of new vehicles piled up across the country, and generate new vehicle orders that would bring people in manufacturing and parts plants back to work almost immediately, Bergstrom wrote.
While Bergstrom Automotive has also seen its sales volume decline last year, Bergstrom said his proposal was not self-serving.
"I'm very concerned about workers out of work," said Bergstrom in a recent interview. "It's very important to get them back to work. There's no reason to dwell on getting manufacturers' costs down."
According to Reg-Trak, a Waterloo automotive research firm that tracks state auto sales, new car and truck sales declined by 13 percent last year in south-central Wisconsin. Truck sales, including sport utility vehicles, declined 15.4 percent while car sales declined 10.2 percent.
In Dane County, car and truck sales in 2008 declined by 11.5 percent from 2007.
However, Wisconsin and Dane County fared better than the nation as a whole in 2008 -- total U.S. car and light truck sales were down 18 percent, the worst performance since 1992.
Bergstrom said the White House acknowledged receiving his letter, but as of Friday they had not provided any further response.
Bergstrom's proposal has generated some support among his peers in the auto retail industry. Allen Foster, general manager of Smart Motors in Madison, said he favored anything that would help stimulate the economy.
"The more we can give consumers, the better," Foster said. "We need to restore consumer confidence."
In a bid to boost auto sales, the Senate voted Tuesday to add an $11 billion provision to the economic stimulus package that will allow most Americans to claim a tax deduction for the sales tax and any loan interest on the purchase of a new car from Nov. 12, 2008, to the end of 2009.
Mr. Bergstrom's proposal takes this to the next level, Foster said.
Smart Motors actually bucked the national trend of declining sales, as 2008 was a record year for the company. Still, Foster felt more should be done to stimulate the economy.
"I'm in favor of anything that helps people get their confidence back," Foster said. "It will be better for all of us in the long run."
Why should anything cost anybody anything? *SMIRK*
And if I buy a $1K beater car, can I keep the $9K they're giving away? I can? Yippee!!!
How 'bout a $5000 check to anyone who replaces an overseas software guy with a American one?
ML/NJ (software guy)
And just like college tuition.....
.....the price will rise to absorb the subsidy.
Just give every person living in America — citizen, legal immigrant, illegal, tourist, whatever — ten million dollars.
Then everybody can buy everything and the economic problems are all solved!
Why didn’t anyone think of this sooner?
oooohhhh, I was only dreaming......
I want a pony!!!
Actually this car coupon trick is going to be done in Germany. The deal here is that you trade in a 9-year old car or older (you had own it twelve months or more), and you get $3250 in a coupon. The car has to be German-made, of course. The last week, this has been a huge topic and the car salesmen are busy with tons of fresh business. There is a limit of course....the first 600,000 folks in...get the deal. So there is a rush.
If you look around, Ford, GM and Chrysler are in deep trouble, with no car sales. The $15 billion we gave to Chrysler and GM? Simply flushing down the drain. They will be back by April for more money because cars aren’t selling. I’m guessing the Obama administration will be stupid enough to hand them another $15 billion...rather than use the $15 billion for car coupons.
Can I have a free pony too?
Even if we get a voucher, there will be strings attached.. Meaning you can’t buy an SUV or truck and it has to be from the Dead Three auto companies..
Ha, Free? That just means the dealers can add 5k to the sticker. Makes me want to vomit that I own 3 cars I bought from Bergtrom in Neenah......
Pie. Where’s my pie. I was promised pie and I want it NOW!
So an industry can’t weather an 11% downturn? 11% doesn’t seem like the end of the world. What the heck?
Next will be the American Dental Association demanding 5K vouchers for getting teeth fixed!
Pick ‘n Pay will demanding $100K vouchers for shoes.
Costco will be asking for $2,000K vouchers for food.
Ayn Rand was a prophetess!
At some point, every one of my kids has had a brainstorm and says to me “Daddy, let’s make pennies like dollars”.
BINGO! Just as big education does to college tuition!
You and I are not the getters of free ponies but the buyer of said ponies for others.
The customer thinks this is a “giveaway” to benefit them.
But this is the dealer talking, and HE thinks this is a giveaway to benefit HIM.
The dealer thinks that, given the voucher, he can raise prices, or avoid giving a discount. So the customer will pay the SAME NET PRICE for the car.
I don’t understand why people don’t get this.
Another scary thing to contemplate: Bambi’s bailout contains how much — $billions? — of “health care subsidies”.
As sure as night follows day, INCREASED HEALTH COSTS will follow these subsidies.
>> 11% doesnt seem like the end of the world.
Leverage works both ways.
i would love a new bmw. just a new 3-series, nothing extravagant!
This guy’s a genius at spending other people’s money!
I'm pretty sure this won't happen. If they know that the person buying the car has $10,000 of someone else's money then that $10,000 car becomes $11,000 or $15000. It's like the vouchers for the cable box for the digital switch. In the free market they would be sold for $10 or $15.00 bucks. Government vouchers forced the price up to $45 or $50 bucks.
Only a demrat would think that giving someone $5000 of tax payer money to puchase anything is somehow gonna help the economy. Only a demrat ignores the fact that tax dollar coffers are broke at every government leval.
It’s right up there with so-called “free” cradle to grave government-run health care. This model has failed everywhere it’s been tried, but by the Marxist god the left is determined take us down this road again and again. The result is as predicatable as a sunrise—trillions of tax payer dollars wasted.
The thing is that nobody wants to buy ANY car right now. Those who were buying at $30K are not now buying at $20K. Car dealers are good at pulling numbers out of thin air, and this is just another example of that.
Unfortunately, it's going to be the other way around.
Oh they're thinking about it, they're going to to do it, they just haven't figured out all the details:
They looked into the possibility of sending debit cards to all 150 million American households, but decided it was not yet logistically feasible.
Didn’t the auto makers do this with the rebate a few years ago? Their sales went through the roof. But, of course, the auto makes probably don’t have cash to spare anymore.
You’ve got to give this guy the prize for the most self enriching special interest proposal yet.
Ya a Mustang!
I’m actually looking at buying a car right now. Now way I’m buying a car from a company that took bailout money
Looks cool, hows it run in snow? LOL!
No ponies for YOU! ;)
You can actually get free horses. It’s the transportation, boarding, feed, and supplies that cost money
What the heck is that? Batman’s golf cart? LOL!
Not a Pinto, that's for sure.
Has anyone up there considered the effect this will have on the value of used cars? Will used car dealers now go out of business because the value of their inventory drops through the floor, but their working capital loans stay at the same value? Are we going to bail out used car dealers?
Then . . . when used cars have such little value and you bring your used card in as a trade-in on the new card — you know, the one for which you have a voucher — won’t that play out in the bottom line of the entire economic transaction?
I didn’t major in economics, but I did take in in college, and I do have an MBA, and I did take it in law school . . . and something’s just not right here.
I’m a new car dealer and I’m taking your used car in trade. It now it worth less than it was in the pre-voucher days because the net cost of new cars has decreased . . . why would I give you as much in trade today as I did before vouchers existed?
And . . . if you can’t make payments on your car loan because you lost your job . . . your used car is now worth less when the bank repossesses it and sells it. You’re further upside down. The bank now comes after you for more money after the post-repossession sale. Are we going to bail out those who default on car loans who now will owe more because the repossessed used cars are worth less?
Am I crazy and missing something here, or doesn’t this skew the entire market? Isn’t is dropping a boulder in a lake and nobody in Washington or in the media is willing or intelligent enough to focus on the residual waves caused by this?
You certainly have low expectations - I'm expecting to get my unicorn that $hi+s Skittles any day now. :=)
“Why didnt anyone think of this sooner?”
I recognize that sarcasm is dripping all over the keyboard as you type but it would no doubt be astounding to know just how many in this country think that is a serious question. I have known people who thought it was just that simple.
Depending on where you 2 live, you can come and pet my horses-—
Put a runner on the front, and Cables on the back and I bet you would be good to go (albeit a little cold).
Ha, Free? That just means the dealers can add 5k to the sticker. Makes me want to vomit that I own 3 cars I bought from Bergtrom in Neenah......””
Build me a car like my 1965 Pontiac station wagon:
Steel Easy to work on myself Mileage about 18 mpg for a car that weighed 4500# curb weight I can take my dogs with me everywhere I put 444,000+++ miles on that vehicle and sold it to a guy in Sweden who restored it, and it was running when he bought it.
Best part??? It cost me $3434 out the door at Robinson Pontiac in Torrance Calif, tax license and all.
Build me a car that is as reliable as that one, and I will consider buying something new.
Get the government out of the car building business. Government doesn’t know jacksh__ about running anything at a profit.
I don’t want a computer telling my engine how to work, which then costs me $100 per hour for some jerk with acne who cannot spell “trying” to diagnose what might be wrong.
I didn’t need air bags surrounding me then, and I don’t now.
I didn’t need a car made out of plastic then and I don’t now.
I ran the car on regular gas and didn’t pay ridiculous prices because this country won’t drill for our own supplies.
I didn’t pay an arm and a leg for insurance, of which over 1/3 was for “uninsured motorist” because there are over 40 million illegals in the country, most of whom don’t know how to drive, and don’t carry continuous insurance.
What do I remember most about my trip to go get my car ( which was built without power stuff for me-not off the lot)???
NO GRAFFITTI all over the buildings between San Fernando Valley and Torrance!!!!!!
I will make anyone a bet:
Let the car companies build exactly the cars they sold in 1955-1965 and the government stays out of the car making business...
I will bet that the car companies couldn’t make all the cars they could sell if they could rebuild them exactly the same as then.
His proposal only reaffirms my contention that cars are too high priced, and the unions get too much money.
You and I are not the getters of free ponies but the buyer of said ponies for others.”
I already own my “ponies”. Come pet a couple..there are 6.
As much as I loved my 62 TBird convertable, I like the idea of never having to change spark plugs, points, adjusting the dwell setting, replacing the exhaust system, cold weather starting problems, replacing brakes shoes, and hundreds of other improvments over the decades.
[I always tell my daughter if her children ask me for a pony, I'm gonna tell them I did, but your mommy got rid of it]
I want an air conditioned barn to keep the pony in. Make that two ponies so the first won’t be lonely.