08-26-2009

With the end of the Cash for Clunkers program there is skepticism about the real intention of the program. Unlike the first time the program ran out of funding there is no rush to action by the House or Senate. This leads conspiracy theorists to speculate about the real intention of the program while giving us an example of how rumors sprout.  

When the program blew through the initial 90-day funding in only one week Congress scurried to add cash before leaving for their August recess. This time there have been no calls for adding funds despite being more than two months from the original planned ending. 

In the business world this lack of repeat attention to a high visibility program, product, or service causes an increase in rumor activity those at the top often do not consider. A program, product, or service dropped after considerable hype is examined by employees who speculate about the reasons. This leads to a rumor phase that questions potential problems with the product or service, the real intent of the product or service, the decision making ability of the leadership, or even the viability of the company. 

What was really behind the program? 

The program did achieve some of the stated goals. Undoubtedly some of the vehicles turned in have made our roadways safer places. At Smart Toyota in Madison, Wisconsin, Jim Neustadt, Compliance Director and self-proclaimed “Mayor of Clunkerville" says Smart received a vehicle covered in horse manure and one that only drove forward because the transmission would not go into reverse.  

However had the removal of gas-hogs been the reason for the program it could have been handled differently. Communities embarking on campaigns to reduce the number of guns on city streets offer cash when the gun is turned into the police. They do not offer a rebate for exchanging your gun for a less lethal weapon. Using the same type of program would have meant giving people a check once the vehicle was turned into the police.  

If the motive was to exchange guzzlers for more efficient vehicles a simple EPA mileage increase standard for trades at any new or used dealer would have done the trick. 

But neither of these alternative programs was considered - only cash for turning in a clunker to buy a new vehicle. 

Was the point to liquidate 2009? 

One possible conclusion is the US government, which owns a large stake in two fresh-out-of-bankruptcy companies, wanted to help with the annual year-end close-out sales. Certainly the program did clear out 2009 inventories of many models. In fact, newspapers normally carrying “end-of-model-year” ads have been filled with the C4C ads. This could make it one of the most profitable year end closings for the automaker. 

Adding fuel to this argument is that the program may have ended so quietly this time as the taxpayer money, potentially spent to get GM and Chrysler out of the model year profitably, was being spent on too many Toyotas and Fords. The government does not own either of these companies which share the top five selling models in the program. 

How rumors start 

Armed with just a few facts and observations one can easily believe the scenario just laid out. Workplace rumors can develop and grow just as easily. 

Don Esslinger, Divisional Vice President at Kmart in the 1990s, left early one afternoon for a Christmas vacation. That morning his wife, who also worked in the Executive Offices in Troy, had received some gifts in her department’s holiday gift exchange. She asked Don to take the gifts home with him when he left. She took them to his office, placing them in a box on his desk. Don left in mid-afternoon but did not want to carry the heavy box all the way to his car. He asked the Security Desk to hold the box while he brought up his car from the parking lot. When Don pulled to the door he got out of his car to see the guard coming out to meet him. The guard was nice enough to place the box in Don’s trunk for him.

Within the hour rumors were raging about Don being fired. Facts were clear. Don left early, his wife was also gone, and a guard was seen “escorting” Don to his car with a box of belongings.

Rumors may be right or wrong. But whichever the case, there are usually enough facts and observations to make them believable. Absent undisputable supporting facts to the truth laid in advance, rumors flourish. In the process, leadership motives come into question. 

Summary 

The real intention of the program may have been to reduce high ozone-emitting vehicles from the streets or it may have been to use taxpayer dollars to boost profits at government owned automakers. A convincing case could be made for either.