Clunkertown, USA

by BILL WADDELL

By now everyone has heard of the Cash For Clunkers program.  Buying America's assets and scrapping them in order to spend money borrowed from our grandchildren to replace them will go down in the history books as one of the dumbest ideas ever, but so be it - the program is in place and running at a breakneck pace.  So fast we are about to pour another $2 billion into it.

A simple look at the cars involved provides the best, pure market validation of true lean management and lean manufacturing we could have hoped for.  The cars Americans are buying with the cash (in order):

Ford Focus, Toyota Corolla, Honda Civic, Toyota Prius, Toyota Camry, Hyundai Elantra, Honda Fit, Ford Escape, Dodge Caliber, Chevy Cobalt

7 out of 10 from a car maker managed somewhere other than Detroit - and the Detroit winner, Ford, the leanest of the three and the one that did not need a bailout

The top 10 clunkers they are trading in to buy this array of non-GM/Non-Detroit products?

Ford Explorer 2WD and 4WD, Ford F-150 2WD and 4WD, Jeep Grand Cherokee 2WD & 4WD, Dodge Caravan, Chevy Blazer 4WD, Chevy Silverado 1500 2WD and Ford Windstar

All from clunker ground zero - Detroit

Foreign versus American has nothing to do with it any more.  As Kevin pointed out in his post a few weeks back, Toyotas and Hondas have as much or more overall American content as the Detroit based companies' products.  This really boils down to Americans voting with the wallets in favor of Toyota and Honda (and increasingly Ford) style management; and voting against GM/Chrysler management - that is the significant difference between the two lists. 

Is there any other way to look at it?

Comments

[Jan Jochmann]

I think the problem with the "Cash for clunker" program in US and the similar programs in some countries in Europe (especially Germany because of the size of the market) is not only that it means that the taxpayers (and later their children and grandchildren when the government debts are deepening) are sponsoring their neighbour's new car.

I think this also leads to creating a huge amount of:
- MURA (first, there was a huge slump of the car sales due to crisis, then there is a huge increase of orders because of thess programs, and probably after this, we can expect another slump in orders when "wrecking money" is gone)
- MURI (impact of the above mentioned orders variation on the production capacities of automotive factories in the whole supply chain + even more worsened by the bullwhip effect)

... which I believe will result in huge amount of MUDA in each of these automotive factories.

I think these factories have and will have a hard time to manage the daily business.

What do you think?

[david foster]

Just saw a headline: "GM board orders faster new vehicle rollout"

which reminded me of some lines from Shakespeare:

GLENDOWER

I can call spirits from the vasty deep.

HOTSPUR

Why, so can I, or so can any man;
But will they come when you do call for them?

[Devon Caravan Parks]

The questions being asked after the program are similar to those heard during its debated formation. Did taxpayers simply subsidize 700,000 new-car purchases or did the program’s widely publicized popularity increase consumer confidence and create an economic ripple effect? Was there a measurable benefit to the environment in replacing those gas-guzzling old cars with more fuel-efficient new ones? Was the program worth it?