Cash for Clunkers - Good or Bad Idea?

kdhspyder

This program like the same program in other countries is a gift to the automakers. The greenie benefits are window dressing for a direct gov't subsidy to the vehicle makers to help them throught the next 12 month.

The only questions about this $4.5 Billion was
'How do we give it to the vehicle makers?'
'Which vehicle maker gets what?'
'How do we involve the most people possible in doing so? That is, 'What method will have the greatest benefit on employment?'

The dealers are just intermediaries. What it will do, and this is the direct purpose, is help to minimize or eliminate some Manufacturer Rebates on new vehicles.

gagrice

We are in agreement on this subject. If I were to trade my 99 Ranger for a more fuel efficient PU truck I would look at Toyota, Mazda and Nissan along with the current Ford Ranger. The problem is my FFV 99 Ranger is rated 17 MPG combined. Which I have Never been able to achieve on even one tank with our crap gas in CA. So I am limited on the vehicles that would improve mileage by 4 MPG. If they allowed me to use the Ranger via the clunker plan to buy an SUV it would be a much easier proposition. As there are several diesel options I would consider. Knowing the market will not improve this year, I would not buy without a HUGE discount Plus the clunker handout and the diesel tax incentive. Which is only $1800 on my first choice BMW X5 diesel. For the base model X5 35d I am expecting to buy at below invoice, adding all the giveaways, should be about $41k before TTL. Same as I paid for my loaded Sequoia Limited 4X4. I see there are only 3 of my model for sale in the whole USA, at well above what I paid for mine. I don't foresee any problem getting my money back when gas prices drop in the fall and people start worrying about the large SUVs becoming extinct.

hpmctorque

"What it will do, and this is the direct purpose, is help to minimize or eliminate some Manufacturer Rebates on new vehicles."

This, and the scrappage component of this program will also distort used car values. The degree and scope of this distortion is difficult to predict. Some say it will be inconsequential, while others believe the full impact will be more far reaching. Regardless of the dgree of impact, it's not a good thing.

Most of us - me included, since I neither need nor like this kind of vehicle - wouldn't consider buying a 10-15 year old pickup or van for ~$1,500-$3,500, but those who need or can use this kind of vehicle will be forced to pay more for one as a result of this program. Or, they'll have to do without one. I believe this is an improper use of goernment power.

druggles

When did car dealers become crooks? You have proof of this outside of the inevitable anecdotal incident, which you probably don't understand?

stever

"The Senate counter-proposal would permit consumers to obtain cash vouchers for the purchase of new vehicles if they trade-in cars or trucks that have EPA fuel economy ratings of no more than 17 miles per gallon."

Senate Members Offer 'Clunkers' Measure They Say is Greener than House Version (Green Car Advisor)

gagrice

If I was a betting man I would say Congress just wants people to believe they are doing something positive. Any truck that runs is worth as much as the Senate proposes offering. I love the way they throw out those percentages of oil saved. Does anyone believe those lying thieves. Here is the bottom line of this article:

It is not looking like any cash for clunkers program is going to get off the ground any time soon.

Meanwhile people are saying I better wait and see what Obama is going to give me for this old clunker. This Congress could screw up a you know what kind of dream.

sebring95

I already bought my clunker just in case. '91 Chevy Silverado with enough miles to make a cummins blush. Looks like a heap of trash but actually runs pretty decent. $400 and I can put it to use around the farm hauling brush and stuff either way. If I can get an extra $4,500 off a Jetta TDI I'll probably buy one. Otherwise the economics don't make sense for me to go back to having a 2nd commuter vehicle, unless I buy some cheap econo-box which I'm not going to do.

gagrice

It is hard to find anything for under $1000 here. The state will give you that much to get it off the road if it does not pass the smog test. I can get a 87 Ford e350 van with diesel for $800 that seems to run ok. Heck I may like it enough to keep it. Diesel is 20 cents a gallon cheaper than regular here.

stovebolter

It is not looking like any cash for clunkers program is going to get off the ground any time soon.

That's the best idea yet as far as a 'Cash for Clunkers' plan.

I admit, I'd be tempted to take advantage of such a plan - I have a beat up '88 Chevy truck (EPA 15 mpg) that I don't really need. I'd guess that as a trade-in, a dealer might throw $500 at it to get a sale, but they'd never put it on their lot.

However, even with a $4500 credit towards a new car, the math doesn't add up - I could buy a good used car for less than $4500 off the price of a new car.

This plan is political grandstanding. Few would benefit from it, and only at a huge expense to themselves and everyone else down the road. There's no such thing as a free lunch.

kdhspyder

It doesn't matter much what the program looks like. The program is simply a conduit to pass $4.5 Billion in stimulus money to the vehicle makers. Instead of the Feds deciding who gets what between F / GM / C / T / H / N / etc they are letting the buyers decide who gets the $4.5 Billion.

It is going to be put through so all the worry and rationales and furrowed brows are a waste of time. Who cares. It's simply a gift to the vehicle makers. View it for what it really is and then ignore it. They had to get the money to the auto industry and they didn't want to appear to favor one over the other so the Feds are letting us make the choices. It's a one shot deal here lasting 12 months.

Nothing to see here, move on.

hpmctorque

I agree with you on the purpose of this plan and that, realistically, it's probably a done deal. However, to quote Yogi Berra, "it ain't over 'til it's over."

stephen987

I think that's an accurate explanation. And if the money will be going to the automakers anyway (and it will), then I think this is a reasonable way to guarantee that the market system (and thus, product quality) plays a role in the process. Yeah, it's a bailout, and a thinly disguised one at that, but I think it will be a better bailout than what they've done with AIG or the banks.

hpmctorque

Okay, but what's the net benefit to consumers and tax payers of destroying those still useful assets (1,000,000+ vehicles that lower income people can use)?

lemko

AMEN, BROTHER!!!

stephen987

Okay, but what's the net benefit to consumers and tax payers of destroying those still useful assets (1,000,000+ vehicles that lower income people can use)?

Some such vehicles are truly beyond regular, safe use. Others could be viable for years yet. And I'm not sure the folks in charge have recognized this.

andre1969

Why would the government want to take my '99 Civic off the road? There is much more benefit to society as a whole by removing my '94 Dodge Ram.

Well, if they get you out of your 1999 Civic and into a new car, there's still plenty of benefit to go around. Whatever company makes the new car benefits. The salesperson and dealership benefit. The state gov't benefits when they collect that sales tax/titling fee, and your insurance company benefits, when they raise your rates because now you have a new car. So, plenty of society benefits...just not you.

I don't think the true purpose of this is to get the guzzling, polluting vehicles off the roads. It's really to help try jump starting the economy.

nippononly

Umm, I thought we had already concluded that nothing that made more than 18 mpg would be eligible as a trade-in under this program?

So no Civics are going to make the cut, that's for sure. Not even 1975 models.

andre1969

Umm, I thought we had already concluded that nothing that made more than 18 mpg would be eligible as a trade-in under this program?

Yeah, we did...I was just pointing out that there IS an advantage to getting people to ditch their older cars for new ones, regardless of fuel economy.

stephen987

The discussion began when one poster suggested that all older cars, regardless of their fuel efficiency, should be eligible. I then pointed out that the money to do so didn't exist, and that the proposal had a reason for targeting the gas hogs.

andre1969

I then pointed out that the money to do so didn't exist, and that the proposal had a reason for targeting the gas hogs.

Sure it does...the gov't just prints out more IOU's and borrows against future generations! :sick:

If nothing else though, even if they can't make ALL old cars eligible, I think they should at least raise the mileage cutoff a little. Actually, I'm still confused as to whether the current cutoff is "below 18 mpg" or "18 mpg and below". Doesn't sound like much difference, but "below 18 mpg" actually encompasses so few cars it's almost inconsequential.

Besides, once they start targeting too many gas hogs, then they're going to whine about not getting enough graft from the gasoline tax, so then they'll raise taxes somewhere else. :P

hpmctorque

I understand your point, but one could argue that some people benefit from reparing the damage resulting from vandalism. Society as a whole loses, though, because resources are used to just put things back to where they were. Now, I'll readily acknowledge that this isn't an apples vs. apples comparison, but my point is that the Cash-for-Clunkers program also misallocates resources.

nippononly

Actually, I'm still confused as to whether the current cutoff is "below 18 mpg" or "18 mpg and below".

Well, that's because it isn't law yet. And the House version, which has passed (I'm pretty sure?), allows up to and including 18 mpg, but the Senate version which just got through it's initial writing, only includes up to 17 mpg.

Confused yet? :-P

I own nothing that would even remotely qualify, so this one is for the birds as far as I'm concerned.

deltheking

The main purpose of this bill is to kick start the sale of gas guzzling SUV`s and trucks which are rotting on the dealer lots.More so for GM,Dodge and Ford,even Toyota Tundras.Very unusual-the 08 Toyota Tundra has a rebate now of $10k.Unheard of for a Toyota. :confuse:

If simply fuel efficacy was the criteria--the new vehicle must atleast get 25mpg..But no--all it needs is 4mpg more than 18mpg.So a lot of trucks and SUV`s qualify.. hence the bill...

So no way is it helping the environment and all that crap..They should just state the program for what it is..Not a crappy excuse etc etc...
And more specifically they want the sales of Detroit3 to rise...They should include all vehicles before 2001 irrespective of mpg ,,, and I would not mind if they include a clause that for old clunkers getting more than 18mpg ,, for these car owners to to get a voucher for a new car they must buy only from Detroit3...Even though I prefer a Toyota/Honda/Hyundai this offer would be very acceptable,.. :P
That way it can really kickstart the sales of all car makers--Det3+Jap3+Korean2
Just MHO.

hpmctorque

"They should include all vehicles before 2001 irrespective of mpg,,,and I would not mind if they include a clause that for old clunkers getting more than 18mpg.,,"

Wouldn't scrapping perfectly good eight year old vehicles be terribly wasteful? Also, unless I'm missing something, the money to pay for this would come from two sources: One, taxpayers, and, two, from further increasing the deficit and the national debt. In addition, expanding the program would further reduce the supply of 2001 and older cars, so prices of the remaining ones would rise, making them less affordable to those who depend on such vehicles for transportation.

Do you still think this would, on balance, be a good thing?

I won't argue that a certain percentage of older vehicles, the ones that have been damaged or poorly maintained, are unsafe, and shouldn't be driven. However, the majority of older cars don't fall into this category. I mention this point about "unsafe old vehicles" because supporters of the cash-for-clunkers programs sometimes bring it up. My reply is that this program isn't about safety. If we wanted to remove more unsafe vehicles from circulation than the state safety inspections already do, this could best be accomplished through tighter and more comprehensive vehicle safety inspections.

Finally, good laws are relatively simple, equitable, and easily understood by all . Does anyone believe that either the house or senate versions of this program meets those qualifications?

kdhspyder

The enviro-greenie blather about this is only window dressing. It's is done only to throw a public relations bone to enviromental groups. Getting upset even in the least way about this new legislation is not even worth the time to type or say the words.

There is another equally as important benefit here though. That 4 mpg increase in fuel economy is not insubstantial. It's not very sexy and but it is worthwhile.

An old SUV or truck that gets 16 mpg Combined that's traded for a new smaller 4 cyl truck or crossover that gets 21 mpg Combined such as a Tacoma will save the owner and the nation almost 25% in fuel usage and cost..to wit:

driving 16000 miles today in the older truck will use 1000 gallons annually
driving 16000 miles next year in the newer truck will use 762 gallons annually
...that's almost 240 gallons not used and $500 to $600 not spent.

As a comparison a 97 Civic owner with an EPA Comb rating of 28 mpg that might switch to the new Insight II with an EPA Comb rating of 41 mpg would see the following savings..

driving 16000 miles today in the Civic would use 571 gallons annually
driving 16000 miles next year in the Insight II would use 390 gallons annually
...that's a savings of 180 gallons not used and $350 to $400 not spent.

Any program like this should address the worst issue(s) first. As a prior poster noted the older Civic is probably every bit as capable today as it was when new. But keeping that Civic in the national fleet is far better for us as a nation than getting rid of it.

stever

"A week after it was put into effect, the United Kingdom's scrappage program is benefiting the sales of small cars and squeezing dealer margins.

...dealers complain the car companies have cut sales commissions, leaving dealerships funding most of the industry's portion. In addition, most of the new vehicles being purchased are small entry-level ones with already tight profit margins."

Small Cars Benefit in U.K.'s Bangers for Cash Scheme (AutoObserver)

kdhspyder

This is the Toyota model of selling. The solution??? Sell more..

Instead of selling 12 vehicles generating $400 each in commission each sales person should give away 50 units @ $100 each in commision

$5000 > $4800. Toyota makes out better.

stever

"Under the House bill, the vouchers would go to consumers who traded in cars with a fuel economy of 18 miles per gallon or less. They would receive a $3,500 voucher toward a new car with a fuel economy of at least 22 mpg. If the mileage of the new car was at least 10 mpg higher than the older vehicle, the voucher would be worth $4,500."

US House Passes 'Cash For Clunkers' Bill

(CNN Money)

Mr_Shiftright

Okay let me get this straight. Now I have a 97 Subaru that gets 21 mpg, and I want to buy a new Mini that gets 32 mpg. So I'll get $4,500 for the Subaru, right? Well I can get that anyway, so what's my incentive?

Hmmm...sounds like the bill is penalize anyone who took good care of their car. That doesn't seem fair....

stever

penalize anyone who took good care of their car

Yeah, I'm psyched.

My minivan is within a couple of years of the end of its life (by your 150k measure) and it's only worth $1,000. And it gets 18 mpg combined.

An xD gets 29 combined, so there's $4500 back off their one price MSRP of $15,320 (including destination but not stability control).

If the Senate says I have to buy domestic, then maybe I can scrounge up a 2010 Penske Vibe.

hpmctorque

According to my understanding of the plan - and someone please correct me if I'm wrong - your Subaru is too fuel efficient to even qualify for this plan, since it gets >18 mpg. You acted too responsibly in your choice of vehicle to qualify. Now, if you had bought a big honking gas guzzler in place of your Subaru, you'd qualify.

hpmctorque

From your description, your minivan isn't a clunker. It may be an old vehicle that's not worth much, but it's probably safe and useful, and might have another 100,000 miles left. If you don't drive it much, because one of your other cars is more economical and practical for daily use, your minivan could probably provide you or someone with years of useful service. Instead, it'll be crushed. How wasteful!

stephen987

your minivan could probably provide you or someone with years of useful service. Instead, it'll be crushed. How wasteful!

That depends on what sort of minivan it is. . .

gagrice

your minivan could probably provide you or someone with years of useful service. Instead, it'll be crushed. How wasteful!

I agree. Here is what I am thinking will happen. The vehicles that are still running decent will be hauled South to Mexico and sold down there. There is very little money in a crushed vehicle. Maybe $50 to $75 in scrap metal. If Steve's mini van is running it should bring at least $500 in Mexico and be driven another 100k miles. Of course if it is a big polluter we will get it back with a SE wind.

If the title does not show some sort of restriction on resale they could be turned around here in the USA. Salvage title will not insure being crushed. A lot of totaled cars end up back on the road. Many times far less than safe rides.

sebring95

What I'd like to know is this....how many folks that currently own a "clunker"

a.) Can Afford a new car
b.) Have one worth less than the certificate
c.) Want to buy a new car

There is such a small number of vehicles that will actually be traded in, this program will be a joke. The only way to get the junkers off the road is if people considering a new car can buy a clunker from someone and trade it in. The folks actually driving these "clunkers" aren't likely to be doing so by choice and the ones that are obviously don't want a new vehicle!

dtownfb

This bill is designed to help sell 1 million vehicles. It's the best way Congress can stimulate the auto industry and appease the environmentalist at the same time. It's not a perfect bill but some people will be able to take advantage of it.

stever

I keep my cars forever but my wife gets antsy for something newer every decade. So it's about that time anyway, and it's the main ride in the household (my '97 Subaru has fewer miles but is even older than the Quest). But you're right, that Nissan engine probably could go another 130,000 miles and it's always passed our smog test.

The cost per mile is .28, not counting depreciation (that brings it up to ~.40 a mile to own and operate). It would be a lower cost per mile but I had to dump about $3,000 in it the last year (new plugs/wiring, then a knock sensor and injectors, and a rear hub imploded). The tires are about done now.

I don't know why I'd want to have it sent to Mexico for $500 when it's worth $1,000 on craigslist, but $4,500 is way better.

Regular is almost at $2.60 a gallon here and a barrel of oil just hit $71 this morning. It would be nice to bump my fuel efficiency up by ~40 or 50%.

andre1969

Hmmm...sounds like the bill is penalize anyone who took good care of their car. That doesn't seem fair....

Wait, life is supposed to be fair?! ESPECIALLY when the gov't gets involved?! That's a new one on me! :P

And if you take good care of your car, then it keeps providing you with reliable service, and there's no need to trade the car. That keeps you from having to pay monthly payments, increased insurance, etc. That's a reward right there!

Also, the "guzzler" has to get 18 mpg combined or worse. So basically, something big like a Crown Vic, V-8 Caprice, etc. To get the full $4500 you have to get into something with at least 28 mpg combined. Most midsized 4-cyl/automatic cars are rated around 24-26 mpg combined. So unless you go hybrid, you're going to have to go smaller. So that means you're trading in a Crown Vic or Caprice on something like a Corolla or Civic. To someone used to those bigger cars, that's a pretty big penalty!

stovebolter

Good points brought up. To answer your question, I have a "clunker" that would qualify for this plan and it is worth considerably less than the vouchers. I also happen to not use the "clunker" all that often, so parting with it would not hurt my feelings at all. I also can afford a new car. However, you've got me on the last point - I don't want to buy a new car, and definitely not one that qualifies for the plan.

Since I already have a reasonably efficient daily driver in addition to the "clunker", I'd be looking at either a replacement "workhorse" (truck) or a "toy". It wouldn't make any sense to buy a new truck for my limited usage, and the cars that qualify for the plan are not exactly "toy" material - even a V6 Camaro or MazdaSpeed 3 don't meet the threshold.

So basically, what I'm left with is to either spend $20k+ to get a vehicle I don't really want/need, or not participate in the program but pay for it anyway through taxes. How's that for "Change"?

andre1969

I'm in basically the same situation. Actually, most of my vehicles have fuel economy bad enough to qualify, but there's no way in hell I'm going to scrap a '57 DeSoto, '67 Catalina convertible, or '76 Grand LeMans!! (although the LeMans has been irritating me lately :mad: )

I also have two '79 New Yorkers that would qualify. And neither one is worth anywhere near $4500. I paid $900 for one and $500 for the other. But to me they're basically big toys that I have a sentimental attachment to. So it's not like they're creaking, smoking relics on their last legs that I have to depend on to get me back and forth to earn my paycheck. Ditto my '85 Silverado. It would qualify, I'm sure. But the truck is still fairly reliable, and does what I need it to. It just wouldn't make sense to scrap it for a $4500 voucher, only to get buried in a new car payment.

fintail

Last night there was a story on a local news show about the "clunker plan", and the car pictured on their graphic was a pristine looking 75-79 Seville, probably an original stock photo. Pretty bad...

andre1969

I remember years ago, seeing one of those "donate your car" advertisements in the local Pennysaver or some other publication. In the ad was was some clip-art of a 1977 LeMans. You KNOW that burned my bacon! :P

Mr_Shiftright

but.....but andre....my old car doesn't have vibrating seats and a rear entertainment system and it can't park itself. How will I satisfy all those pressing, vital needs? :P

sebring95

I realize what the bill is for, I just have serious doubts about it working. Unless someone like me can scoop up a clunker for cheap and get a voucher....I don't see many folks using it. The 18mpg figure is way too low as it basically limits the program to trucks/suv's. Most are valued at well over $4,500 anyway, and the ones that aren't fit into my other two categories....can't afford a new car or don't want one.

andre1969

but.....but andre....my old car doesn't have vibrating seats and a rear entertainment system and it can't park itself.

My '68 Dart had vibrating seats. I hated it but the ex-wife loved it. It was most noticeable while stopped at traffic lights and such, but I found that if I took it out of gear it wasn't as noticeable. Until one day I put the car in neutral and the ex- complained "You just HAD to spoil it for me, didn't you!" :P

Mr_Shiftright

AND the Subaru doesn't have a rear view TV camera, the tailgate isn't power operated with a remote, and, get this, I can't even see my iPod play list displayed on the NAV screen!!

andre1969

AND the Subaru doesn't have a rear view TV camera, the tailgate isn't power operated with a remote, and, get this, I can't even see my iPod play list displayed on the NAV screen!!

Oh you just have to get creative. I can get my iPod list to display just fine in my '67 Catalina, and also have GPS tracking and everything! All it takes is a laptop hooked up to the cigarette lighter! :P

Mr_Shiftright

Small consolation...my front seats are....are.....FABRIC....I am so humiliated to confess this publicly.

My MGB had heated seats, especially in summer.

Well I tell ya'...given the unadulterated pieces of crap some people are driving in my town (and parking for weeks in front of my house, as we speak) I wouldn't mind paying to see some of them disappear.

stephen987

Shifty, I'm pretty sure my neighbors would take up a collection to move my old truck out of the front yard. Then again, it has kept the tax assessor at bay. . .

gagrice

I don't know why I'd want to have it sent to Mexico for $500 when it's worth $1,000 on craigslist, but $4,500 is way better.

The point I was making, if the Feds mark the title in such a way that it cannot be sold in the USA, it could end up anywhere else. I have to wonder who they have lined up to dismantle a million cars? Many places you have to pay a disposal fee for a junk car. Does the bill mention if the dealer is responsible for handling the junker? If so how much will the Feds pay for that service? Recycling all the good parts would have merit. I would not expect this Congress to think that far ahead. They are appeasing the UAW & the Green weenies.