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A National "Clunker Plan" - Bad For Classic Enthusiasts?

hpmctorquehpmctorque Posts: 4,341
edited April 22 in General
In an effort to stimulate the economy, it seems that some of our lawmakers are anxious to introduce a "clunker" plan, to spur auto sales. I don't know about you, but I'm not in favor of stimulating sales in this manner. I think it's an expensive, inefficient "make work" program, that will do little to reduce green house gases. One reason is that older vehicles tend to be driven less than newer ones.

Another reason is that some people will exploit the program by collecting money for cars that would be junked anyway.

A third reason is that it doesn't take into consideration the significant amount of pollution produced in manufacturing vehicles - from mining and processing the raw materials to transporting new vehicles to dealerships, and steps in between. And how about the environmental effects ot prematurely scrapping vehicles before the end of their useful lives?

See what you think...

"Wed Jan 14, 2009 6:41pm EST - WASHINGTON (Reuters) - Congressional lawmakers proposed a consumer incentive on Wednesday to help revive slumping auto sales and get the oldest, most polluting and less fuel efficient vehicles off U.S. roads.

Industry executives and automaker lobbyists believe bipartisan 'Cash for Clunkers' initiatives introduced in the House of Representatives and Senate offering up to $4,500 toward the purchase of a new vehicle is likely destined for economic stimulus legislation now taking shape.

'We face real challenges with trying to encourage drivers to trade in their older, less fuel efficient vehicles, particularly in this tough economic climate,' said Dianne Feinstein, a California Democrat.

A congressional aide said no decision has been made about whether to include the measure in stimulus legislation.

The approach would permit consumers to collect a voucher from dealers designed to offset the cost of a new car. Vouchers could be used to cover transit costs in some cases. Old cars would be scrapped.

Environmental groups agree that older sport utilities, pickups and vans are among the worst polluters and reducing their population will reduce greenhouse gasses.

Proposed Senate legislation would fund the program through 2012, potentially targeting up to one million vehicles annually.

Similar programs are underway in Texas and California and in Europe.
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Comments

  • parmparm Posts: 723
    Two questions. 1) How old does the "trade-in" vehicle have to be for it to qualify as a "clunker"? 2) Does this plan apply to the sale of a new domestic models only, or can new imports take advantage of this program too?
  • hpmctorquehpmctorque Posts: 4,341
    Excellent questions, parm. These details haven't been released yet.

    One of my key concerns for collector car enthusiasts has to do with the supply of parts. Supporters of this program will say that although many old cars will be taken off the road, valuable parts will be saved. I don't buy this argument. Sure, some parts will be saved and later sold, but many will be lost forever. I think that a lot of cars will be completely scrapped as a result of this program, and the supply of scarce trim parts and other parts that collectors depend on will be reduced. The upshot will be that fewer hard-to-obtain parts will be available and/or they'll become more expensive. This will affect the lower end collectibles most, but also the next tier of collectibles.

    The good news is that if this program is enacted it'll have no effect on expensive high end classics. That's nice, but the majority of collectors can't afford true classics, so this program would affect a large percentage of collectors and hobbiests.

    From a purely emotional standpoint, I enjoy seeing old cars around. The fact that we have a very active topic entitled "I Spotted An (insert obscure car name here) Classic car Today!" means that many participants on Edmunds "Classic Cars" discussions feel similarly.
  • andre1969andre1969 Posts: 22,152
    the $4500 only applies to vehicles model year 2002 and newer, that are EPA-rated 18 mpg or lower. That 18 mpg is according to the original window sticker, so if it was originally rated at 19, but has been downrated to, say, 17 with the new testing procedures recently put into place, that doesn't count.

    Also, I don't know if the 18 mpg is the city MPG estimate or the combined. I'm guessing it's the combined. It's mainly designed to target big, heavy SUVs and get them off the road. So if you have some worthless, high-mile 2002 Expedition, the idea is to get you into something new and more fuel efficient. Also, you only get the money if you buy something new with fuel economy that beats the standard for its class by at least 20%.

    That $4500 is reduced for older vehicles. I think for 1998-2001 it's $3,000. And anything older, it's $2,000. I have a gut feeling that anything 1977 and older might not even qualify, because they didn't start putting out fuel economy numbers until 1978.

    I really don't think this plan would get too many really old cars off the road. For instance, take my '79 New Yorkers. The 360-2bbl has a combined EPA estimate of 14. I dunno what the city/highway ratings are, because the EPA website only lists the combined for 1979. Anyway, it would qualify for that $2,000, towards a newer vehicle.

    Still, even though the market says otherwise, my New Yorkers are worth way more than $2000 apiece to me. I'm not about to scrap one (you can only do one car every three years) just to get myself into a new car payment on something that I might not even like. And most people who are still driving a 1979 New Yorker because they can't afford anything better, sure as heck aren't going to be able to qualify for a new car payment...even with an extra $2,000 kicked in for the down payment!

    As for my 2000 Intrepid, it wouldn't even qualify for the plan, because it's too economical. I forget what the combined rating was, but it was rated 20/29 city/highway.
  • hpmctorquehpmctorque Posts: 4,341
    I'm probably in the minority, but I think raising the tax on gasoline would be a much more efficient way of reducing the negative impact of older gas guzzlers. For those who oppose higher taxes, the increase in the gas tax could be offset by a comparable reduction in other taxes.
  • andre1969andre1969 Posts: 22,152
    Actually, I'd be in support of a gas tax, as long as the extra revenue went towards something useful, such as alternative energy, improving roads, public transportation, etc.

    Plus, with a gas tax, EVERYONE pays their share. We don't reward someone for buying an economical car or punish someone for buying a guzzler. You pay for what you use, and you reward yourself when you use less. Whether you drive less, drive more slowly, combine errands, or what have you.

    Plus, small cars still put out pollutants. They still cause damage to the roads. Now, nowhere near what a big truck would do, but when you consider the fact that a smaller car has a smaller footprint, and smaller tires, on a PSI basis, it might be stressing out the road just as badly as a big car. So IMO, nothing should get a free ride.
  • hpmctorquehpmctorque Posts: 4,341
    Good points!
  • Mr_ShiftrightMr_Shiftright CaliforniaPosts: 45,990
    I'm generally a big fan of "incentive economics", so I have no problem with this basic package.

    Most older cars are not worth saving anyway. We don't keep all our old hot water heaters and refrigerators (well in some states you do I guess :P ) so worn out utilitarian cars have no historical value and should be re-cycled IMO.

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  • hpmctorquehpmctorque Posts: 4,341
    Wouldn't raising the gasoline tax be a simpler, less bureaucratic and more cost efficient way to apply "incentive economics?"
  • fintailfintail Posts: 34,345
    Of course, but logic and public policy have an inverse relationship.

    Gas taxes hit everyone, and anything called a "tax" creates howls, so this kind of scheme is friendlier for politicos, and it takes on a half-baked "green" charade at the same time.
  • hpmctorquehpmctorque Posts: 4,341
    The following is from AutoWeek:

    By BOB GRITZINGER AND GREG KABLE

    "Cash for clunkers: it's been tried in Europe, but would it work in America? One proposed solution to prop up new-car sales in the United States involves paying bonuses to owners of older vehicles who send their cars to the scrapyard and buy new ones.

    Proponents say that not only does the auto industry benefit, but so does the environment, as emissions decrease and fuel economy typically improves in newer models.

    Critics, however, say that scrapping older vehicles hurts collectors by reducing the number of older models available and also hurts those least able to afford to buy newer vehicles by driving up the price of used cars.

    'It definitely could have a negative effect on the collector community,' said McKeel Hagerty, CEO of Hagerty Insurance, which specializes in insuring collector vehicles. 'What’s sitting out there now that’s not too appealing that might be a collector in the future? Lots of future collector cars could be destroyed.'

    Hagerty and others say that the scrappage idea really is an auto-industry bailout masquerading as a green program--most cars scrapped are more likely to be the third or fourth cars in a family, which are rarely driven and therefore contribute little to environmental problems.

    'Scrappage programs don’t work. They affect collectors, hobbyists and lower-income people,' said Stuart Gosswein, director of regulatory affairs for the Specialty Equipment Market Association, an automotive aftermarket group. 'Our mantra has been to just give vouchers to people to buy a new or a better used car, without tying it into scrapping an older one.'

    As proposed, the Consumer Assistance to Recycle and Save bill, or the CARS Act, would offer vouchers ranging from $3,000 to $7,500 to owners of vehicles eight years old or older to scrap their cars and buy new models that are more efficient, including electric cars. Variations on the theme limit the vouchers to buyers of North American-built models, or the vouchers pay less to those who buy foreign-built vehicles. But the central idea--a sliding payment scale based on the fuel efficiency of the replacement vehicle--is consistent in seeking to boost struggling auto sales under the guise of improving fleet fuel economy and lowering emissions.

    It sounds promising, and results from a similar idea in Germany show that the kind of money the U.S. government is suggesting would be enough to move a lot of people out of their old clunkers and into new sheetmetal.

    In Germany, the program, known as Umweltprämie (literally, 'environmental rebate'), appears to have produced a 21 percent increase in February car sales compared with the same month in 2008, according to the German Automobile Association. In the midst of what some call the worst economic downturn since the Great Depression, the 278,000 new passenger cars registered in Germany in February represented the single biggest volume for that month in more than a decade.

    Dealers say strong sales demand continued in March, with buyers hoping to get in on the program, which rewards car owners who scrap vehicles that are more than nine years old and subsequently purchase new ones with a payout equal to about $3,388. The program has been so successful that the government has voted for additional funding (beyond the $2 billion already exhausted) to extend it through the end of 2009. Other European countries may follow suit, although a more modest French plan that offered about a $1,762 scrapping rebate didn’t prevent France’s new-car sales from dropping 13 percent in February.

    Even if such a scheme gained traction in North America, there are no guarantees that it would bolster production in North American factories. The German program boosted sales of the German-built Opel Corsa, but the majority of sales have come from cars such as the Volkswagen Polo, which is built in Spain.

    Critics of Germany’s scrapping program also argue that it has begun to affect the profitability of small businesses. Local auto mechanics are up in arms, saying that the policy robs them of potential business by taking older, higher-maintenance cars off the road.

    Germans also are concerned about seeing sound but aging cars disappear.

    'It breaks my heart seeing perfectly good versions of the Golf GTI going to the press,' said one Volkswagen Golf GTI fanatic. 'They’re highly sought after by collectors, but all their owners care about is receiving written confirmation from the scrapyard so they can collect their rebate.' "
  • Mr_ShiftrightMr_Shiftright CaliforniaPosts: 45,990
    Hagerty's argument is weak. Back in "the old days", people were very naive about what was collectible and what wasn't. But now it is very obvious within ten years time if a car is going to be valuable or not. Sure there might be a handful of people who would lament the crushing of a rusted out, tattered '82 Thunderbird, but it is a worthless thing, so what's the problem? Do we cater to the whims of a cult of ten people?

    Also, do we REALLY think that someone would "accidentally" crush a Buick GNX or an '96 Impala SS or a 90s Mustang Cobra?

    Miatas are already 19 years old and you can still buy a decent one for $2000. When exactly is this collectibility for this car about to start? 2050?

    However, in the year 1989, a 1970 MGB or Lotus would not have been thrown to the junkyard if it was anything more than a carcass.

    Collectors today are far more educated than 30 years ago IMO. They know what to keep and what to throw away, except for the "hoarders" of useless backyard junk, but that's a different issue.

    The market, and restoration costs, determine what is saved. Fixing up old cars is certainly not going to suddenly get cheaper. If it is totally implausible to restore a 1990 Oldsmobile now, it's not going to get any more cost effective in the future, that's for sure.

    Back when cars were made in bewildering variety, it made sense to save an old 4-door rusted out '55 Buick, because the '55 Century convertible could use some of the bits and pieces. But nowadays, this is hardly the way modern cars are built.

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  • andre1969andre1969 Posts: 22,152
    Collectors today are far more educated than 30 years ago. They know what to keep and what to throw away, except for the "hoarders" of useless backyard junk, but that's a different issue.

    Hey, at least all my backyard junk still runs! :P Well, except for my '76 LeMans, which can't be coaxed out of the garage.

    While nobody would accidentally crush a Grand National, for instance, I could still see the point. A regular old Regal base or Limited doesn't have much value. However, if someone was trying to fix up a Grand National, say one that had some body damage, every old regular Regal that gets crushed is one less parts source.

    Now if the thing is already clapped out and knocking at death's door, I won't shed a tear. But I don't like the idea of cars that are still useable getting crushed.
  • fintailfintail Posts: 34,345
    It would be cool if the scrapped cars could be held for a short period while enthusiast groups are allowed to feast on the old heaps. The gubbamint could even make some money out of this by selling parts or selling entire cars with some kind of agreement that they would just be used for parts. This would keep anything worthy
    from being destroyed, and would help out the good survivors by putting some parts into the stream.

    I have a hard time not being leery of adopting something identical to what the aimless German government wants.
  • Mr_ShiftrightMr_Shiftright CaliforniaPosts: 45,990
    We can't keep this old stuff lying around. There's more and more of it every year. There's no room for it. Storage space and garage space is getting expensive everywhere but the boonies, and the boonies are not the likely place to store valuable old cars.

    Old cars that are hoarded just get ruined anyway. They are in a sense being "junked" but more slowly :P

    Besides, on any really popular collectible, the aftermarket is extremely active. One needn't ever worry about finding a part for a mustang or a camaro or a miata or a MINI or a BMW or a Benz or countless other potential or real collectibles.

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  • hpmctorquehpmctorque Posts: 4,341
    "Now if the thing is already clapped out and knocking at death's door, I won't shed a tear. But I don't like the idea of cars that are still useable getting crushed."

    I agree completely on this, and there will be many 8, 9 and ten year old, relatively low mileage cars that will be destroyed, along with the older, clapped out ones. Why? Mainly, to make jobs for UAW workers and to help the dealers, at the expense of the independent mechanics and auto supply stores that provide parts for and service older vehicles.

    Also, the legislation that's being proposed will not permit the guy who drives a fuel efficient '90 Geo Metro to get a trade-in subsidy, but will reward those who bought gas guzzlers. And let's remember where this money will come from - you, me and the owner of that Metro.
This discussion has been closed.