Cash for Clunkers - Good or Bad Idea?

selden · July 2009

" Why just pick the irresponsbile people who made poor choices in vehicles in the past to get rewarded?"

13 years ago I had a teenager in the house, and needed a minivan. I don't view that as a poor choice by an irresponsible person. The teenager has flown the coop, and I'm looking for a smaller car.

The CARS law is what it is, and like most pieces of legislation, involved a lot of lobbying and compromising. Some people (me) will benefit from it, and some (those with cars getting more than 18 mpg) won't.

Mr_Shiftright · July 2009

That's a good point.

Once the American auto industry caves in, that's it, it's not coming back---not for the rest of eternity----any more than our consumer electronics industry. For a good example of what will happen to us, look to the UK. Aside from a few minor players, they don't make cars anymore except for foreign owners.

A U.S. president would have to be a bonehead to stand by and allow the American auto industry to evaporate without at least attempting every possible remedy to save it.

I'm not sure where the idea got planted that if a person loses a job in one industry he finds one in another in the 21st century America. Yeah, he does in a sense, from machinist to Burger King.

stever · July 2009

"DETROIT (Dow Jones)--The U.S. government will launch a $10 million ad campaign to promote the "Cash For Clunkers" program, which kicks off Monday with a launch event in Washington, D.C., according to a person familiar with the plan.

The ad campaign, funded by the National Highway Traffic Safety Administration and slated to run August through October, features an old vehicle that goes into a compactor and emerges as a new car as a spokesman explains the benefits of the program." (no link, sorry).

The automakers are already doing ads and they'll ramp the ads up shortly. Meanwhile the feds are waiting until August to start their ad campaign? I guess the NHTSA thinks the money isn't going to run out anytime soon.

gasmizr · July 2009

It will be interesting to see how the automakers try to increase the transaction price with this program as they have already started to do. I am betting there will not be near as much discounting as there has been in the past 8-9 months. You may do a little better as an individual but maybe not near as well as you may think. I just purchased a car at $1200 under dealer invoice for a Honda. Finance rates are good, not great, but there is no customer rebate from the manufacturer. Negotiated the deal before the C4C program was really laid out. I paid cash, no trade, no vehicle in my household met the C4C requirements. I am wondering how many dealers are going to "deal" at those types of discounts now that this plan is available. Chrysler in a heartbeat, GM probably, Ford and the Japanese very little, Korean yes. I wish you all luck but I will be interested to see what the top level transaction prices are verses the early part on 2009. Something to think about. :sick:

stever · July 2009

Yep, the local Hyundai dealer sure didn't start off with a competitive number, but I'm still not quite ready to buy so I didn't dicker with them on the numbers at all. The Scion we've shopped is at a one price store, so that would solve some of that ADM problem. Priuses aren't marked up here, but they are going for close to MSRP.

After driving an '89 for ten years and now driving a '99, I really would like to break that cycle and get a 2010 model. The Prius is a 2010, but the Hyundai we liked won't be here asa 2010 until August or September (hopefully; it's already available in Canada I think). Ditto the xD on the Scion lots - their 2010 will be $150 higher but will include ESC standard (it's like a $650 option now).

So ... if the clunker vouchers run out fast and the program isn't re-upped, we aren't going to be too upset. The van could still bring $2,000 on trade (maybe more, since if all the clunkers are crushed, dealers will be fighting for used inventory, lol. I laugh, but that's been an issue in Germany with their clunker program). A $1,500 or $2,500 "loss" won't bug me near as much as rushing into a purchase that I'm going to be stuck with for a few years.

I think you're right about the discounting, and I'm curious to see if the automakers cut out the incentives next week. Chrysler's aggressive incentive just announced this week may temper some of that.

erniesdad · July 2009

Once the American auto industry caves in, that's it, it's not coming back---not for the rest of eternity----any more than our consumer electronics industry. For a good example of what will happen to us, look to the UK. Aside from a few minor players, they don't make cars anymore except for foreign owners.

You are correct. The british car industry was killed by the British government in an attempt to "save" it.

stephen987 · July 2009

You are correct. The british car industry was killed by the British government in an attempt to "save" it.

No, the British mass-produced auto industry was killed by poor quality, poor labor relations, stupid management decisions based on a lack of product awareness, and too many small companies competing for a small market.

By the time the government forced the merger of BMC and Leyland, the handwriting was already on the wall. The resulting British Leyland conglomerate had too many incompatible brands fighting with each other for internal political advantage, and little-to-no economies of scale because of a lack of shared engineering. Government "help" certainly didn't help--but the industry was already in the tank.

100chuck · July 2009

Well here's my deal
2009 Ford Escape XLT FWD MSRP: $24,975 Sun and Sync package(4 cylinder)
Taxes Fees and plate transfer 1459.00
Rebate on 2009 Escape -$1000.00
Ford Rebate and special financing -$1500.00 0% Financing for 36months
Z-plan discount -$2364.00
Trade-in Value 96 Taurus SHO -$4500.00
Total out the door $17,070.00 or $474.17 per month.

philliplc · July 2009

cars.gov site changed to say "starting on the 27th" instead of 24th

stever · July 2009

The final rules are out today. One section says that people who purchased after July 1 can talk to their dealer about getting the voucher.

The rules define some more stuff, like "drivable condition" (you can't tow your clunker to the dealer for example).

Another new wrinkle is that engine blocks now have to be destroyed. Too much chance for fraud otherwise.

Here's the link, in a pdf file.

philliplc · July 2009

dealers must disable the trade-in vehicle's engine prior to transfer to a disposal station.

sounds like a hassle

stever · July 2009

"The agency has determined that a quick, inexpensive, and environmentally safe process exists to disable the engine of the trade-in vehicle while in the dealers possession. Removing the engine oil from the crankcase, replacing it with a 40 percent solution of sodium silicate (a substance used in similar concentrations in many common vehicle applications, including patching mufflers and radiators), and running the engine for a short period of time at low speeds renders the engine inoperable."

I guess they read Snopes about sugar in the gas tank not being that big of a deal.

The NHTSA estimates the cost of killing the engine will be $30 or less and the dealer will have to pay that. So the $50 payment the dealers get from the feds is going to be eaten up fast.

sandiegan1 · July 2009

It's a great stimulator to the economy, but the idea that it is somehow helping the environment is a farce. Generating a brand new car takes natural resource sand creates emissions, so just because we are getting rid of an '87 Suburban doesn't mean we are really helping the environment. So few cars qualify for the program -- they should loosen up the requirements ( Cash For Clunkers Calculator )

jipster · July 2009

Sounds like a lot of waste ($$$). Destroying perfectly good engines and automobiles, that could be used to get people in automobiles that can't afford one.

My mother in law will be trading in her 1998 Mercury Villager for something new. It's a nice van, low miles... very good condition. And they are going to crunch it? Stupid... bad idea.

stever · July 2009

Here's the blurb from the final rules about the purpose of the program.

"The CARS program assists consumers who trade in their older, less fuel efficient vehicles for new, more fuel efficient vehicles. The program is designed to remove these older, less fuel efficient vehicles from the road, by requiring the trade-in vehicle to be crushed or shredded."

I haven't read all 136 pages of the final rules, but I didn't see anything about stimulating the economy, and that's what I think the real purpose of the current law is.

philliplc · July 2009

customers will be required to complete a survey to be included with the application for reimbursment?

hopefully it's short : )

Mr_Shiftright · July 2009

The British auto industry was killed by inept management, surly labor, and incredibly lousy product IMO. There's no saving THAT bad an industry, and I think the British government realized early on that they were trying to resuscitate a corpse.

The American auto industry has far more vitality that the moribund British did in the 1960s, and far better product.

maryh3 · July 2009

I can save about $1500 if I take a Jeep Patriot over the Mazda Tribute. Is it worth it? Is the Patriot as safe as the Mazda Tribute?

stephen987 · July 2009

I can't speak to the safety issue overall, but I think the Mazda is a much nicer vehicle to drive and will hold its value better.

kdhspyder · July 2009

The fact that it's being cloaked in a greenie wrap is simply a bone thrown to the enviromentalists to bring them on board with this legislation. The real goal of the US Gov't is to get a significant number of buyers to use less fuel. This is being driven by the US Intelligence agencies and the Pentagon. Funny how they hide in the shadows and allow all the discussions to roil around about 'bailouts', 'stimulus', 'greenie issues' and yet they get what they want in the end - the US driving public using less fuel.

Slick, very slick.

kdhspyder · July 2009

See post just above.

The Intelligence and Military factions in our government don't really give a hoot about enviro issues or what is 'right' or 'good' or what's good for the poor and impoverished that can't afford anything more than a clunker. All that matters is that 1 million old guzzlers are crushed and made to disappear. In doing this the country will use less fuel.

Stupid to you but smart for them.

kcripper · July 2009

Who pays the Taxes---Dealers?

ingvar · July 2009

It's a great stimulator to the economy
It could be better if Big Brother gives 3500 to anyone who want to buy a new car.

lemko · July 2009

C4C sounds like it might have the unintended consequence of raising the prices of used cars to the point of unaffordability. There will be fewer used cars and fewer used parts available, Could this simply be a nefarious plot to get the poor off the roads?

stever · July 2009

The feds have this up today:

Welcome to the CARS vehicle eligibility guide!

plekto · July 2009

And still the entire thing says nothing about non OEM vehicles. This is a huge problem for older SUVs, pickups, and 4x4s. Many had different gearing options for instance that made a huge impact upon MPG.

http://www.sonoransteel.com/Toyota_axle_codes.html
Just look at that - if they tested the vehicle with the 4.10 axle and you have 4.30, I can guarantee that gives you a big MPG difference.

Even the venerable Crown Vic came with three different axle ratios...

And then there's the idiocy about what happens if you swap the transmission out as is common for a lot of older 4x4 "beaters".

kdhspyder · July 2009

Nothing has changed. You pay the taxes to the dealer and he forwards them on to the state.

stever · July 2009

I think there's some confusion about the income tax part. The voucher isn't income to the consumer, but the dealer may have to pay income tax on the entire sales price.

"The CARS Act provides that the credit is not income to the purchaser, but does not address any other possible tax issues." (from the final rules).

Plekto, there's a blurb in the final rules around page 26 that talks about using the shortest wheelbase model for purposes of determining eligibility by size classification, and there's another paragraph about secondary vehicles (where a company takes a chassis and makes mods to it). I don't think it addresses individual mods at all. Who knows about the axle combos.

dtownfb · July 2009

Stick with the Tribute. It's a better vehicle.

dtownfb · July 2009

Congratulations! you got the deal done.

maryh3 · July 2009

Z-plan discount -$2364.00

What is this Z-plan discount?

dtownfb · July 2009

250,000 used vehicles off the road is nothing compared to the overall used car market. At one point, I remember reading that close to 40 million used cars are sold each year. You are talking about less than 0.1% of the used cars sold each year in the US.

This bill is simply a way to get a few gas guzzlers off the road and try to help new car sales in the fairest way possible. The banks and lenders will only qualify those who can truly afford to make the payments.

The nice thing is there appears to be more traffic in the dealerships. We'll know in a couple of months if it helps.

stever · July 2009

Sales Tax and C4C Credits: Tax Profile Will Vary State to State (Edmunds Daily)

And the answer remains - it depends.

100chuck · July 2009

Father retired from Ford similar to the A-Plan. If you don't drive a Ford you can't go home

erniesdad · July 2009

>>
The British auto industry was killed by inept management, surly labor, and incredibly lousy product IMO. There's no saving THAT bad an industry, and I think the British government realized early on that they were trying to resuscitate a corpse.
>>

Er, that's a pretty good description for the bulk of the American car industry as well.

What's the phrase? Never buy a car built on a Friday?

Mr_Shiftright · July 2009

Well the American auto industry has its major faults, but it never hit the depths of ineptitude that the British car industry did, and probably never will sink that low. We are talking about a level of quality so bad that some of the cars couldn't even drive out of the factory. Ditto their motorcycle industry. The Japanese rolled right over BSA, ,Triuimph and Norton within 3 years of direct competition.

Nor are American cars thoroughly obsolete like the British cars and motorcycles were in the 60s. We are much more competitive, even though we are hardly at the top of our game.

maryh3 · July 2009

I hate to say it but it does seem that the biggest supporters of this program, and America/cars are kdhspyder and Mr Shiftright. Spyder sells Toyota's and Shifty drives a Subaru. I have to mention that the taking of American Treasury money and buying foreign cars with it, will enrich the Japanese Treasury in the form of corporate taxes. Spyder might see some commission from his Toyota sales go into his own pocket - to buy a new Toyota with -- but it appears like he wants to take MY tax my to enrich himself? And If Shifty thought American cars were so good why does he buy Subaru's? Bet all the mechanic shops that would have been needed to fix up the clunkers that are being crushed are incorporated in the US - and will be contributing less corporate taxes to the US Treasury now.

I'm guilty myself because I'm buying a Mazda, but I'm not the one raving about this program either. Going on vaction after this one. Thanks for advise.

andre1969 · July 2009

Spyder might see some commission from his Toyota sales go into his own pocket - to buy a new Toyota with -- but it appears like he wants to take MY tax my to enrich himself?

Well yeah, but that IS America, after all. I'm sure you could look at any one of us and find a way where your taxes are benefitting me more than you, and vice versa. Heck, I've been to a public library once this decade, I think, yet my taxes still support them. So anybody that's gone to a library more than once has gotten more benefit from my taxes than I have.

And, KDSpyder pays taxes, too. So do the customers who buy his Toyotas. And cut him some slack...I own Toyota stock, so every time he makes a sale, I benefit from it. :shades: At one time, my shares of Toyota had shot up enough that I used to joke that they paid for the '76 LeMans I bought a few years ago, plus the repairs I've had to put into it. But, like the rest of the economy, Toyota has taken a bit of a beating. At this point, it might have paid for the '79 New Yorker hubcap I just scored off of eBay. :sick:

That being said, I'm still sorta neither here nor there on it. If I was in a situation where I could take advantage of it...well, I would if I could. But I can't, so I shant. :P

stever · July 2009

"There was so much interest in the program though that when automobile dealers across the country began the certification process this morning, the federal computer system they logged into crashed due to the overwhelming demand.

New cars typically depreciate 20 to 30 percent in just the first year, according to the auto Web site Edmunds.com. By year three, their value is down an average of 45 percent!

Edmunds says the average sale price of a brand new car is $27,800, whereas the average price of a used car is $13,900. That's a savings of roughly $14,000 achieved simply by letting somebody else be the chump who buys the brand new vehicle!"

Is 'Cash for Clunkers' for Chumps? (ABC)

kdhspyder · July 2009

maryh3....Guilty as charged, ty. This is the very point of the program.
andre1969....all slack is appreciated, ty.

Mr_Shiftright · July 2009

I think you are missing the point here. This is an economic program, not a fairness or a patriotic or a social justice program. It's not "american" or any of those other "value" thingies. It's pure unadulterated shoveling of cash into the economy in the form of a voucher system.

As for forbidding the purchase of foreign cars, that would undoubtedly have repercussions for American business abroad that we could ill afford and probably violates international trade agreements.

I like my Subaru and I voluntarily choose to keep it. If American car companies had offered an AWD wagon that could take a beating, I'll have bought one...sure, why not? But they don't so I won't.

And my next car will probably be a VW TDI diesel sport wagon or a MINI Clubman. Why? Because America doesn't make one of those either.

This is my fault? :P

maryh3 · July 2009

Andre - the 2 posters are the biggest proponents of bailing out GM and the US auto industry. What is the purpose of doing so unless they will buy their products? It is claimed that this program will get the UAW working again, get GM back in the black again, jump start the economy and ressurect the Godly GM. What is the purpose of destroying cars in this program to get GM to produce replacements again if we are buying Japanese cars and sending the profits overseas? We'd be better off keeping the clunkers running using American mechanics labor.

I'll admit that I don't think this program is of much benefit to the US as a whole nonetheless I looked out for myself first and used it. I believe most people using it are doing the same. We won't fake that we are helping out the US, rather we are helping ourselves. The "patriotic" ones are buying American made autos. Support of this program is not.

maryh3 · July 2009

It's pure unadulterated shoveling of cash into the economy in the form of a voucher system.

I think most of us are shoveling cash into Japan and Korea's economy.

Love Subaru's myself and my dream car is a Tribeca. I simply disagree that we should be pumping money into GM so their cars can sit on the lots. And I can't cheer for Obama's program because as the Defender of the Constitution he should be looking out for the US more than the rest of us should be. I also have trouble with the debt some will incur because of this when so many are already debt heavy.

Mr_Shiftright · July 2009

Well GM loves it and the UAW loves it and car salespeople love it so it's doing what it's supposed to, IMO. I think they are all Americans, not Koreans :P

maryh3 · July 2009

They are in business to make money, not cars. And when they stop making money they stop making cars and go out of business. They should be happy IF they make a profit. That's the bottom line. Right now the THINK they will. Let's hope some are better than we are and buy their products.

I really would have bought the Ford Escape over the Mazda had Ford matched Mazda's price, but the were at least $1000 higher for the same car.

elroy5 · July 2009

My brother has a 90 Lincoln Town Car. He would like to trade it for a new truck. Sadly, his Town car doesn't qualify for the program (18mpg). So now he is looking at selling the Town Car for as much as he can get, then buying the cheapest, barely rolling F250 or similar gas guzzler he can find, and using that to get the credit on a new truck. Sure, he'll be getting an old F250 guzzler off the road, but I don't think what he is looking for would be on the road long anyway. That, and the fact that the truck he wants to buy is only rated at 3 more mpg than the Town Car. This is not a good program, IMO.

mondvogel · July 2009

I want to use Cash for Clunkers to buy a Toyota Prius, but it seems about all the dealers have is boring white (eupehmism: blizzard pearl, with $220 tacked on for "special" color). The local dealer is pushing me to buy one of the white ones he has in stock, and acts like I can't pay now for something I'd like to special order. Is he just trying to manhandle me?

andre1969 · July 2009

If the Town Car is rated right at 18 mpg, then it should qualify. Early drafts of this bill had language that said "less than 18 mpg", but that got changed to "18 mpg and below" I thought?

maryh3 · July 2009

Yes, 18 mpg DOES qualify. Traded in my 18 mpg T&C last night for the $4500 rebate.You should have seen the clunkers. I am no longer embarrassed to drive anything anymore.

stephen987 · July 2009

Elroy, the program will be over before that barely rolling F250 is eligible. Remember--the clunker has to be in your name for a full year before it's eligible.

Cash for Clunkers - Good or Bad Idea?

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