Cash for Clunkers - Good or Bad Idea?

stephen987

The way I read it, since you are the one who owns the clunker, you would also have to be at least co-owner of the new vehicle.

stever

I think Dave meant that the dealer may want to give you a good trade-in value instead of doing the voucher so the dealer could resell the trade-in for more profit.

It's been a bit lost in the news, but you can also do a 5 year lease on a new car instead of buying it. I don't know how many clunker owners would be interested in that option.

jeffyscott

The law: http://www.cars.gov/files/CARS-Law.pdf

I don't think it is actually all that clear. If a vehicle meets the definition of eligible trade-in vehicle it would need to have been continuously insured and registered to the same owner for a period of not less than 1 year immediately prior to such trade-in. But I'm not seeing anything that clearly states that the buyer of the new vehicle has to be the owner of the trade-in.

I'd wait and see what the administrative rules say, those should be much more specific and detailed. If it turns out to matter, I wonder if it will be possible to add her to the title as a joint owner of the car being traded in without violating the 1 year ownership thing? These sorts of questions will need to wait for the rules, I think.

joegiant

Who-whoooooo!!! Just passed my 2 year state emissions test today with ol' Bessie. Twenty two years young and counting!!! Now I don't have to fret over fixing, for absolutely NO REASON, a "Cash for Clunker" vehicle that is going to the crusher anyway...after they strip down all her verrrrry fine parts of course (She's all there btw! 1987 Ford F-150 parts in pristine condition. Not a hole in the bench seat nor a ding on the quarter panels. Big smiling chrome bumper up front and my Bush '88 sticker on the back window. Now just because neither gas gauge works and ya get to guess how much gas is left in the tank or the windshield wiper motor finally died and we have to find an overpass to hang out under while the rainstorm passes... well, whatever.) C4C here I come!

Which brings me to your 250k number '987. Based on your pronoun, I'm guessing WE are on our way. The two of us are in. Only 249,998 more vouchers to be sent out. Ya better get in line now ya'll. Seats are going fast.

kdhspyder

Yes I think that's the answer, steve. For the buyer it's a moot point.

A. The vehicle is 'worth' $3300 in trade and maybe $5500 at retail. The dealer gives the buyer $3500 as a trade value so that he, the dealer, can keep it and resell it himself and thus make $1000 or $1500. The buyer doesn't care because he/she gets $3500 either way. Nothing to see here, move on.

The vehicle is 'worth' $700 in trade and maybe $2000 at retail. The dealer would be a fool to offer the buyer $3500 for that vehicle.....off with it's head.

plekto

You noticed this, too?

Add in the previous list about the fact that this applies to:(as another poster stated)

..those that have a qualifying 'clunker'
..those that want to give up that 'clunker'
..those that want a new vehicle, as opposed to a used vehicle
..those that want a new more fuel efficient vehicle, as opposed to a less efficient vehicle
..those that can pay cash or qualify for a loan

****
Sounds exactly like this was custom-made for commercial fleets and not for private owners.

stephen987

Except that each owner gets only one voucher. That pretty much kills it for fleets.

gagrice

Just thinking about trading for a VW Touareg TDI. It has a base price $43,550 with destination charge. With a few options it will pass the $45k mark. Same goes for several other high MPG SUVs. Even the Highlander Hybrid limited will push right past $45k. Anyone read the fine print on that $45k restriction. It completely eliminates the GM hybrid SUVs.

wball

The law states that implementing regulations must: "(4) require the dealer to disclose to the person trading in an eligible trade-in vehicle the best estimate of the scrappage value of such vehicle and to permit the dealer to retain $50 of any amounts paid to the dealer for scrapping of the automobile as payment for any administrative costs to the dealer associated with participation in the program."

So in theory the dealer can only keep $50 and the balance would go back to the person trading in the vehicle?

stephen987

I think it's the MSRP of the actual vehicle, not the base price of the model.

forboystoo

You would think that the gov. would have covered that to say the new owner must be the previous owner of the trade in.
..Otherwise I could give my buddy (say $1000) to trade in a junker he has in his yard so I could get the $4500 off a new car and still keep my gas guzzler on the road...

BUT no reason you can't transfer ownership later...

jeff71

That's how I read it. so you ought to be able to get $100 or so in addition to the $4500 credit. Somebody has to get it and its not the dealer, its not the salvager and there ain't nobody else involved.

jeff71

Exactly. How many people are there out there that have a clunker that they don't even drive anymore, but probably can coast into a dealership? They don't need or want a new car or another car, but somebody fronts them the money, they buy the new car and immediately sell it to the party that gave them for a couple of thousand more than they paid (net) for it? Does save much in the way of fuel does it? Hmmm. Wait for ads in the paper to pop up advertising a willingness to do a deal.

larsb

Looking like the Greenola For Junkola plan is a BAD idea.

Good THOUGHT, but in practice? Not so much............

talbot3

I have 2 "clunkers" one under my name and my wife's name and another under only my wife's name. Can we get 2 vouchers for 2 new cars in this scenario or only one.
Thanks

stovebolter

Does anyone know the actual way that the EPA "combined" fuel economy figure is determined? I had been under the impression that they took 55% city economy and 45% highway (city and highway determined by actual tests), but this is not true when you look at the figures on fueleconomy.gov for all vehicles.

For example, the base Corvette w/manual transmission is rated at 16/26 with a combined 19 - but even if you took 15.5 and 25.5, the combined should be 20 even. Likewise, the Hyundai Genesis coupe 2.0T/6M is rated at 21/30, combined 24, even though the lowest you can calculate is 24.55.

I haven't been able to find any actual information on this on any EPA pages, and it seems relevant with the cash for clunkers program.

stever

55/45 is what I see too but trying to read the rules is a bear. The calculation stuff is near the bottom third of this document (assuming it's current...).

Fuel Economy Labeling of Motor Vehicles

jeffyscott

550 miles @ 16 mpg and 450 miles @ 26 mpg, gives a total of 51.7 gallons burned in 1000 miles of driving. 1000 miles divided by 51.7 gallons = 19.3 mpg combined.

pragmatist1

Unfortunately, www.fueleconomy.gov has not listed the 2000 Grand Voyager and Grand Caravan (and other years, too). They only list the Voyager and Caravan, which have a combined EPA of 19, as opposed to the Grand Caravan and Grand Voyager, which have a combined EPA of 18, and thus WOULD qualify for Cash for Clunkers, if the website would only get it right! Look at the twin Chrysler Town and Country for comparison, which is listed correctly. Email fueleconomy@ornl.gov and ask them to fix this - they need to list the Dodge Grand Caravans and Chrysler/Plymouth Grand Voyages correctly, separately from the Voyagers and Caravans, so that we'll be able to take advantage of Cash for Clunkers.

stovebolter

Thank you, I had been approaching the calculation backwards, which obviously skews the results. I'm guessing that's why quite a few of the figures I did quickly were wrong.

100chuck

Yes but you need to supply proof that the car has a valid registration and insurance for the previous year.

stovebolter

Thank you for the link, you were being very kind when you said reading through the rules is a bear.

I was able to confirm that the simple method jeffyscott gave is correct.

Now if you'll excuse me, I accidentally stumbled into the description of CAFE fuel economy calculations, including the ethanol-gasoline blends, and now I need to go hit my head against the wall.

kdhspyder

Yes but ... so what? The net effect is that there is an old gas guzzler off the road and a new more efficient vehicle has been sold ( the purpose of this program ) which is presumably being driven on the road. So Who Cares?

kdhspyder

Why? I don't see any issues with it. We're going forward on the assumption that there will be a bunch of people hitting the lots beginning July 1.

There's another dirty little secret here too. Watch the incentive programs from the D3 - two of which are just emerging from BK court and need profitable sales fast in order to get back on their feet.....not to mention Toyota and Honda.

gagrice

My guess is by the time you would get the EPA to do anything the money will all be gone. I would go to the dealer that has the car you want and let them do the haggling with the NHTSA. They have the most to gain getting you to buy. The dealers are probably going to take the path of least resistance and go with the sure winners. This is going to be like musical chairs. When the Billion is gone the deal is over. Those in the middle of making a deal will be out of luck.

stever

Watch the incentive programs from the D3

So what's your prediction? Will the automakers decrease the next round of incentives to increase profits, especially since people will be shopping with their vouchers?

dodgeman07

So what's your prediction? Will the automakers decrease the next round of incentives to increase profits, especially since people will be shopping with their vouchers?

///////////////////////////////////////\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\-

I don't think the D3 can afford to lose out on ANY potential sales at this time. My bet is big late summer incentives plus the gov't vouchers will get some people moving toward their lots and that's what's needed.

Crank up the volume on incentives, add in the voucher program (which most people will not use by the way), and have the local dealers in line for "kickbacks" and a lot of 2009s will move off the lots in August-September.

There is some pent up demand in this down market. There are many people who have put off buying a vehicle for over 6 months now and with the economy stabilizing (albeit at a low level) this could really be a boon for some beleaguered dealerships out there.

There is a need for reliable transportation that most consumers have differed for many months now. If the D3 cuts incentives now I'd be really surprised.

druggles

Massive incentives are what ruined the resale value of D3 products. Even if their quality reaches the Japanese level, the reality of poor resale values caused by excessive fleet sales and dealer and consumer incentives have ruined their value. D3 vehicles are a lousy value new, but a compelling value as pre-owned.

Regarding Cash for Guzzlers; How many people have figured out that the true ACV of the trade in is subtracted from the gov't voucher amount? I suspect consumers AND dealers will be stripping everything they can of these trade ins, as they all have to go to the crusher!

gagrice

I would predict that a lot of dealers will use the C4C to leverage the value of trade-ins. Especially the later model PU trucks and SUVs. Tell the customer we will match that $4500 voucher and take your F150 in trade. The customer does not care what happens to his trade-in. Dealer can shave a couple thou off MSRP on that new car, PU or SUV and not have the hassle of dealing with the Feds on collecting the voucher money. In my case It would be easy for a used car dealer to get $4500 for my 1999 Ranger PU. It is clean and runs ok. If the new car dealer wholesales it for $3500 takes a $1000 hit off MSRP, he is doing better than sitting on a new car.

Of course in my case, I will beat the dealer down below invoice and want the full $4500 or NO DEAL. At that point his choice is to take the sure money from Sam with a wait of who knows how long, or take a chance on getting rid of the vehicle on his used car lot.

jeffyscott

Really??? $4500 for a 10 year old Ford Ranger...would anyone really pay that?

I think your premise may have some merit, the dealer may take a small hit to skip dealing with this program. I have my doubts about your perception of the value of your Ranger and I have my doubts that the dealer would take a $1000 hit rather than take the sure $4500 from the Feds.

dave8697

Took a look at the used cars at a local Buick dealer. Saw a 1996 S-10 ext cab V6 with auto in slime green paint and 78,000 miles on it. They were asking $7,900. It was garage kept. I had to laugh having bought a '99 model of same vehicle in red paint for $2500 with 88,000 miles 2 yrs ago. $2500 was the trade-in offer at the time. Mine had sat in the S. Fl. sun for 7 years and had some scratches and a couple door dings.

Saw today that the voucher is a 'substitute trade-in value' and is subtracted above the taxable line. This was per article on cnn.money. That makes vouchers better than incentives by 7% in Indiana. A little hurt for state tax coffers there, but selling new cars generates a lot of state tax income.

plekto

Really??? $4500 for a 10 year old Ford Ranger...would anyone really pay that?

If it's 4x4, possibly.

Mr_Shiftright

Yeah, a Ranger Supercab 4X4 in really nice shape could bring that money.

jeffyscott

It looks like it would have to be a 4x4 as only the V6 has low enough mpg and those are all 4x4 according to edmunds. I'd always thought of the Ranger as a cheapie small pick-up...like the Focus of the truck world. Of course, this is not the first time I've been surprised at what others are willing to pay for old trucks and SUVs (not to mention Hondas and Toyotas).

gagrice

The 1999 Ranger is an XLT super cab 2WD. V6 FFV with automatic. Not a dent or repair on the truck. My only complaint is it is gutless in the hills and pulling my utility trailer. On Craigslist it would take a while to get $4500. This C4C business will raise the resale as many will be eliminated. I would trade for a new Ranger with the larger V6. However it does not get very good mileage so not eligible for the incentive. It is only one MPG better after 10 years. That's progress. The Up side is the Ford Ranger with bigger non FF V6 and 5 speed auto is selling about $4000 under invoice. What to do. I never get in a hurry to lose money.

kdhspyder

As noted above don't be too optimistic on the value of your trade or any trade at this time and in this market. Since the economy crashed last Fall..all thru the dark winter of our despair and the cold bleak months early this year the value of all trades have fallen dramatically..why?...nobody is buying. Good luck tho.

stever

And the $4,500 TMV pricing is dealer retail. Trade-in and private party is way lower. I don't see a dealer giving voucher values for an older Ranger if flipping inventory is a goal.

President Obama Signs Cash for Clunkers Legislation (AutoObserver)

gagrice

It is not a very high priority in my life. If it sits for a year and I continue to drive it the 3000 miles per year I have over the last 2 years, it is no big deal. If I could get the sure $4500 on something I want it would be worth my time. C4C will work for those that have a beater truck or SUV and they want an econobox. For those that want to upgrade to a new PU or SUV of comparable utility, it does not work very well.

joegiant

You are EXACTLY right, gagrice. As you've soooo correctly stated - "C4C will work for those that have a beater truck or SUV and they want an econobox. For those that want to upgrade to a new PU..., it does not work very well." You've hit the nail squarely on the head. When $100 (probable value of old beater) turns into $4500 overnight, that's magical stuff right there. And as far as the real world 15-16 mpg being upgraded to the upper 20's to lower 30's for everyday errand running, additional cash in pocket over time. It will harm the Auto Zone's of the world though as these older vehicles dooooo go through parts from time to time and the repair shops who keep these things running, I would imagine, aren't exactly smiling over this sudden loss of old vehicles in their respective service bays.

Second thought. How do you all think the dealerships who just fought with the federal government, unsuccessfully btw, over the forced closure of parts of their businesses (Chrysler bankruptcy) and now being almost forced to "participate" in the program so as to not lose sales to competitors? Bet those guys are sick to their stomachs over this government intrusion into their little fiefdoms.

jeffyscott

Please...like any business they are happy to have this sort of "government intrusion". Their only complaint would be that it is not enough intrusion. I'm sure they would like to see the government intrude even more (and with less work for them) by just sending every citizen a voucher for $5000 that could be used only toward the purchase of a new car, but that does not mean that they will not be happy to have a few extra buyers even with a bit of extra paper work (it's not like they don't have people that are used to handling government paper work already on their staffs).

I'm not sure why you guys think this requres owners of junky old trucks to by "econonobxes", when their pile of junk will be worth $3500 toward a new truck with only a 2 mpg improvement.

kdhspyder

Second thought. How do you all think the dealerships who just fought with the federal government, unsuccessfully btw, over the forced closure of parts of their businesses (Chrysler bankruptcy) and now being almost forced to "participate" in the program so as to not lose sales to competitors? Bet those guys are sick to their stomachs over this government intrusion into their little fiefdoms

Political posturing.

The dealerships didn't fight the govt about the closures those were the work of Chrysler and GM. The two of them have been complaining about a bloated distribution system for years. BK was their route to slimming down. Nothing involving the govt here.

Hey the dealers don't have to participate, everythng in the program is voluntary. It's a great country.

gagrice

when their pile of junk will be worth $3500 toward a new truck with only a 2 mpg improvement.

Finding a comparable PU truck today that has improved by even 2 MPG is tough. For $3500 I would just keep my PU. The fellow that works for me and lives in Mexico would give me $3500 in a heartbeat. He cannot find a PU in TJ that runs for $3500. He wants it with the $800 lumber rack for that price. Which I would remove before I trade the truck on a new one under the C4C. For me accepting less than $4500 from the plan is not going to happen. I would give it to a family member or sell it to Ricardo.

dglozman

I'm sorry if this was already mentioned in this forum, but I just do not have time to read trough 1150 posts..
The 18 gallons per mile limit is calculated based on when the car was new or it is estimated on its current condition? If it is based on new condition, then this program does not make sense at all.. I have 1986 Mercury Sable and it is according to the manual has 20mpg. Well maybe in 1986 it was that, but now 23 years later it is much worst.. I was thinking to just get rid of it - donate it or just give it up to the junk yard since I'm planning to buy a new car and this one will not cost anything if I decide to trade it in, but when I heard about this program, I thought that I could take advantage of it...

Does anybody know what MPG is taken into consideration?

Thanks!

stephen987

It has nothing to do with the vehicle's condition. It is the "new EPA combined" mpg. In other words, it's the original window sticker mpg, corrected for differences in test procedure that have occurred over the years.

I'm sure car salesmen will face a lot of questions like this--"I know what the government says, but I've never gotten over 18 mpg with this Taurus/Sable/LeSabre/Grand Caravan in my life." Customers who don't know exactly what to expect will feel cheated--just as those who are convinced that a dealership can sell a $20000 car for $12k always do.

dglozman

Than I do not see what is the use of this program... Whoever designed it - are completely clueless....
It is totaly idiotic...

jeffyscott

Go to fueleconomy.gov and look up the "combined" mpg. If it was 20 mpg on the original sticker, it may just meet the 18 based on the estimated new revised number (revised based on the new test methodology, not based on the age)...though I don't see any Sable that had original sticker mpg as low as 20.

dglozman

Customers who don't know exactly what to expect will feel cheated--just as those who are convinced that a dealership can sell a $20000 car for $12k always do.

Don’t blame the customer - blame the dealer for that. For the last 10 years or so - MSRP amount is completely irrelevant for majority of cars that are sold in US. It is completely useless as depreciation value - which is calculated based on MSRP of the car and is not based on the REAL price of the car. The car is worth for what is sold - not what it was listed for. So your $20,000 could be $200,000 - it does not matter. If it sold for $13,000 then the car worth $13,000 and the customer should expect to buy it for 13K

jeffyscott

Ah, but if it had worked out such that you could cash in your pile of junk for $4500, then it would be the greatest government program ever created, right?

dglozman

I went to fueleconomy.gov and it is shows 18mpg city and 26mpg highway... So is it qualifies?

stephen987

Than I do not see what is the use of this program... Whoever designed it - are completely clueless....
It is totaly idiotic...

Think of it this way: how would you prove to a dealer, or to a government office, that your car gets less than the EPA mileage, or less than any other '86 Sable?

That's why they use the EPA mileage. It's at least measured under controlled, identical conditions, so it is a useful (but admittedly somewhat flawed) method of comparing the economy of different cars.