Will Cash for Clunker's Benifit Railroads?

[GP-9_Man11786]

 From what I've read about the cash for clunkers prorgram, it seems as though the railroads could see a surge in autorack traffic. Here's links to some stories on MSNBC: http://www.msnbc.msn.com/id/32402024/ns/business-autos/ , http://www.msnbc.msn.com/id/32394221/ns/business-autos/. Additionally, since old vehicles must be scrapped, the railroads could see increased scap metal traffic too. What are your thoughts?

[Ulrich]

Cash for clunkers...hmmm. or maybe the rails can get cash back for every old GP9 or SD40 they turn in on a brand new EMD or GE product...

[rluke]

It's a good boost for now. But these are cars that would have been traded next year or the year after. So things are sure to slow down again.

[ALCO Fan]

IMHO there will be little impact from the "Clunker" program because the program is aiming at clearing out unsold inventory already delivered. This year's etimated run rate is 10 million vehicles, far below last year's 14 million units so railroads will see little if any new traffic. On the scrap side, most clunker crushing is local and the steel industry and export steel is in recession and not looking for more scrap steel. The railroads will not see significat business growth until the recession ends in late 2010 of early 2011.

Tony -- Up on "The D & H Bridge Line" 

[greyhounds]

Well, the only increase in production I've heard about from CFC is that the only non-government owned American automaker, Ford, will increase production by 10,000 units split between the Escape and some other model that I don't remember.  If'n every one of 'em was shipped by rail that would be less than 1,000 carloads.  There could also be some loads of parts, but all-in-all, it ain't gonna' move the needle.

There will be a negative effect from this government intervention in the economy.  Someone who was driving around in a paid off 1998 Ford and trades it in on a new Subaru will now have a car loan payment.  That means they will have to cut back on other purchases.  That will mean less freight to haul.  Someone who would have loved to buy that 1998 Ford if it was a regular trade in now can't have it.  So he/she's got to spend money to repair their even older clunker or spend more for a different used car.  So they will have less to spend on other things.  That, too, will mean less freight to haul.

Chick-a-Boom, Chick-a-Boom, don't you just love it.  It's De-Ja-Vu all over again.  It's 1933 and the danged government is trying to impoverish us because they know best.