[waterarf5]

My brother in law is excited about GM's cash for clunkers program but I am having some trouble understanding the logic. I would appreciate it if someone could explain what I am missing.
My focus is not on the Canadian government rebate but the rebate that GM provides. Let's assume that a vehicle costs $40,000 and Gm provides a cash for clunker rebate of $ 3,000 for a net cost of $ 37,000. The value of the clunker to the dealership is likely scrap value so I don't know why I would not be successful if I approached the dealership and just offered $ 37,000 ( forget the cash for clunker rebate ). The dealership would lose the scrap value of the vehicle but they would also avoid all the hassle of dealing and disposing with the wreck.
What am I missing ?

 

[mork]

nothing. I am not familiar with the program or anything, but it sounds like a marketing gimmick is all. Sort of like the manufacturers that went all ga-ga with "employee pricing" over and over a few years ago.

 

[Dr_V]

My understanding is that auto dealers usually set the sticker price 10-15% higher than what they paid.

This means that, on a $40000 car, an average person will have between 5 and 10% ($2000 to $4000) of "wiggle-room" regardless of whether they're trying to trade-in an old car or not...

 

[OhGreatGuru]

It is not just a marketing ploy. Part of the difference might be that the $3k rebate is coming out of GM's pocket, not out of the dealer's profit margin. So the dealer might not be so ready to give it up if you don't comply with the conditions of GM's offer.

In the US the rebate actually comes from the government, and the government's purpose is to get gas-guzzling and pollution causing cars off the road. Only certain vehicles qualify as "clunkers" for this grant. The Canadian government is not providing the same level of subsidy, but the program being offered by manufacturers is still partly in support of the federal "Retire Your Ride" program, and I believe trade-in vehicles must be on that eligibility list to qualify.