The Land Rover Writer

Wednesday, December 10, 2008

What To Do With $15 or $35 Billion?

According to the FTC's most recent information, the average cost of a new car in the US is $28,400. Now that's from the NADA, so it's probably on the high side, but let's use it for now.

Instead of giving the US-based auto companies $15 billion right now as a cash infusion, what if instead, you simply gave each person who needed/wanted a new car or truck $28,400? That would provide sales of 528,169 cars and trucks right away.

If you said that a reasonable number of people can afford some car payments, but lack the down payment to meet new credit requirements, then you might instead provide a 25 % down payment to each person who needs or wants a new car. $7,100 per purchaser would enable the sale of 2,112,676 new cars and trucks.

And if we decide the forward the entire $35 billion last requested, well a $7,100 down payment would enable the sale of 4,929,577 new cars and trucks. The funds required for the credit required to implement these sales could come from the $700 billion bailout to our banking system - which seems very reluctant to loan funds to consumers at this time.

The sale of these cars would also get a lot of older, less efficient, slightly more polluting cars off the road. Since the '90's were the decade of SUV and large pickup sales, you could move more people into cars and smaller vehicles. The median age of all cars in the US is ow 9 years.

The resulting sales spurt would also benefit the companies that supply products to manufacturers, auto dealerships, parts and service retailers and give automotive magazines a lot to write about. It would also make it far more likely that more of the $35 billion could actually be paid back to the federal government.

Or instead, we can provide the funds directly to the manufacturers and their Board of Directors to decide what to do - which interests you the most?

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