And when something hits Capitol Hill, they are all over it.
Like the Automotive Aftermarket Industry Association (AAIA), which does an outstanding job representing replacement auto part makers and marketers. And it is AAIA’s job to protect that turf, and ordinarily they do it well.
But sometimes trade groups can be a tad shortsighted. Such as this week when AAIA came out against the aptly named “Cash for Clunkers” legislation making the rounds in Congress.
AAIA, sensing that having Americans junk their old cars in favor of a government check toward buying something new, more fuel efficient and certainly more environmentally friendly was a bad thing for its constituency, came out against the bill. Fair enough, that’s its job.
But then it stated the “proposal will harm the environment, negatively impact car owners, waste billions of taxpayer dollars and hurt the hundreds of thousands of vehicle service and repair businesses in America.”
OK. Then it gets better. "It seems arrogant to destroy perfectly good vehicles with many more years of useful life just to entice consumers to purchase a car that they might not be able to afford," said Kathleen Schmatz, AAIA president and CEO. "This is hauntingly reminiscent to the home mortgage debacle when consumers purchased homes they could not afford."
Huh?!?!?
First of all, I like Kathleen. Used to work with her in her former career with Babcox. She’s very bright, and works hard for her members. But unsupported, and somewhat confusing statements, just don’t cut it. If you’re for or against something, say what you want but back it up with some facts.
Second, I get AAIA’s fear that members might lose a few sales. But worrying about next week’s sales when the entire auto industry – foreign and domestic – is on the brink makes no sense. It is not as though the vehicle population will shrink, so there will still be plenty of good, honest service opportunities – provided we still have a car industry.
Third, her Chicken Little statement comparing car financing to sub-prime mortgages is akin to comparing apples to albatrosses. They both start with A, but that’s as close as they get. Having just been through the car financing game, I can tell you that it ain’t about putting butts in the bucket seats any more; dealers and banks alike are being ultra cautious. They have way too much at stake. So people who couldn’t afford to buy any car would still be in that boat.
Fourthly, I have no idea how putting new cars on the road and retiring a pile of vehicles nine years old and older might hurt the environment. And certainly, I would think, selling more cars is more fiscally responsible than our current effort to throw taxpayer money into Detroit’s wishing well.
Finally, AAIA states "Cash for Clunkers would prematurely destroy vehicles and their valuable parts and components, denying more affordable used vehicles and parts to millions of low and middle income families who cannot afford to purchase a new car even with a $3,000 to $5,000 government voucher.”
So, because a select group of people might not be able to afford a new car, even with a government voucher, nobody should have such an opportunity? Using a handy payment calculator at a car dealer Web site, if you took an $18,000 car and put a $5,000 down payment (the voucher) even at 8% interest, payments for 60 months come in at $263 per month. That’s not bad for a “middle income family.”
And who is to say a used car is any more affordable? New cars admittedly require less service work (presumably), so, yes, there would be less service work inventory. But used cars can eat up a family budget far quicker; unless you’re buying a “certified” pre-owned vehicle with decent warranty protection (and who isn’t these days?), most used car buyers are facing a crap shoot.
As for the used parts portion of that statement, I didn’t know that boneyards were AAIA members. Patching up old wheezers just because you can is not good public policy. Boosting the car industry – import and domestic – and putting more fuel efficient, less polluting vehicles on the road is. The aftermarket might suffer a brief hiccup, but the greater long-term good would be best served if Cash for Clunkers moves forward.
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– Jim Smith
