Saturday, February 27, 2010

Cash for Clunkers

  It's been slow at work for the last 8 months but really slow the last two, now February and March are typically kinda slow in the auto repair biz but this is pretty amazingly bad. Yesterday in my ample free time at work it occurred to me that I had forgotten one of the probable contributors to this time of suckage... Cash for Clunkers.
  Anyone who had the cash or credit went out and bought a new car because our federal government subsidized the purchase price and then required said old cars drivetrain be permanently disabled so those cars didn't go back into the market.  So people with the money for repair or maintenance on their "gas guzzler" bought a new car, after all if Uncle Sam wants to help pay for it, why not?
  Well here are a couple reasons 1) New car sales crashed after the program ended putting lots of stress on dealerships and their commission paid salesmen. 2) It depresses the vehicle maintenance market which means a lot of small businesses and their employees are heavily stressed and dipping into their cash reserves. Some shops and techs will die from this drop. 3) It creates a market bubble very similar to the housing bubble there are economic incentives to get people in cars now and worry about whether they can afford them later. 4) It means I need to go get a part time job or start doing side work at home which I hate for a multitude of reasons but pays pretty well as I have little traditional overhead.
  Those of you who don't know an automotive mechanic or technician as we sometimes like to be called are asking what does he care if it's busy or not that just means more time surfing the web or whatever and getting paid, nope to the paid part. See most techs work on what is best called commission meaning I get a piece of every billed hour of labor. Some shops also guarantee their techs a certain base salary, usually an unattractively low number to encourage productivity, but many don't and where I work is one of those, so no work equals itty, bitty, teeny paychecks that don't cover expenses. I'd get a new job but no one is hiring....the market is depressed by a much higher than normal number of new cars on the roads which will need little to no maintenance for the next 100,000 miles.
  It is another example that shows government interference in markets always damages some other portion of said market.

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