Cash for Clunkers Open Thread
Aside from a preview last December, to this point Car Lust has been mostly silent on the Car Allowance Rebate System (CARS), better known by its colloquial name, Cash for Clunkers. I know my fellow Car Lust authors have been itching to discuss it, and I'm sure many of you readers and commenters have as well. I have been holding off to this point because it's a political, current-events issue, and as such outside of our normal scope.
As the issue has been the focus of a great deal of news and controversy lately (from reporting on cars traded in and purchased through the program, to the means of disabling the "clunkers," to the discussion of continuing the program), I have rethought that position and I'm putting up this Cash for Clunkers open thread today in lieu of our normal weekly open thread. You have all done a great job in not hijacking other posts to discuss Cash for Clunkers, so here's the official Car Lust home for reader discussion of the subject. Let's keep it all here. Feel free to weigh in with your opinions, as well as links to your favorite news stories and analysis pieces.
Since this is a government policy, I'm relaxing the usual no-politics Car Lust rule. However, please keep these discussions on the policy and not on the people, the political parties, or partisanship. Reasonable people can disagree, but if the conversation turns unfair, partisan, and/or disrespectful to others (either on or off Car Lust), I will delete and/or close comments. I have a lot of faith in the Car Lust community to keep our discussion productive and respectful--let's prove how mature and thoughtful we can be. Just so we're all armed with the facts, here's the official CARS site.
Just to start the discussion, I'll share my personal, likely uninformed opinion. My most honest, most visceral response to Cash for Clunkers is sadness--sadness that old cars are being destroyed before their natural end. Older cars are rolling history. Chevrolet isn't making any more 1991 Chevrolet Caprices, for example. These cars are a non-renewable and, in my mind, precious resource. That's not a position I can argue convincingly to our legislators, obviously, but I'm sure there will be a few readers who understand it. Maybe our population at large doesn't care that a large swath of cars are now endangered before the end of their natural lifespan, but I certainly do.
The policy is written in such a way that it will probably, hopefully have minimal effect on the cars closest to my heart, but all the same I think it's wasteful to wantonly destroy a whole generation of functional older cars. Buying a used car is a form of recycling, after all. Production of a new car requires raw materials and massive amounts of energy; the process creates pollution. Why create new when we can reuse?
I can understand the desire to push customers to more efficient new cars--the program helps bolster the automakers and modernizes the American vehicle fleet--but if the primary purpose is driving fuel efficiency, why does the program mandate that the participating customer buy a new car instead of a fuel-efficient used car? Why destroy the trade-in "clunker" when there are a lot of people in America who can only afford a used car? Destroying functional used cars works to reduce supply of affordable cars for Americans who can't quite afford a new car.
Anyway, that's my opinion. What do you think?
--Chris H
Steaming Pile on August 17, 2009 at 05:26 AM
First of all, I doubt the CARS program will result in a genocide, to put it rather figuratively, of classic 80s and early 90s cars. Yes, somebody turned in a Maserati Biturbo for C4C because he couldn't find a buyer for it, but that's a rare exception that is glaring enough to become news. Given a rather naive Econ 101 assumption about the basic rationality of consumers, those that have managed to hold at least $4500 of resale value will undoubtedly be spared. Besides, the money will run out long before even a measurable percentage of eligible cars are retired.
My biggest gripe about C4C is that the goals weren't anywhere near ambitious enough. All you needed to qualify is (1) have a vehicle that got 18 MPG or less, and (2) trade it in for something that was rated 5 MPG better than that. The '91 Caprice in your example probably got something like 13 MPG; I find it hardly satisfactory that someone might have gotten an 18 MPG midsize SUV in the bargain. The return on investment diminishes the closer the trade-in vehicle comes to the 18 MPG cutoff. But Congress being Congress, what goes in usually bears little resemblance to what comes out the other end.
So if the idea that C4C is intended to take polluters and guzzlers off the road is to be debunked, the only thing left is the economic stimulus part. You can't deny that C4C stimulated the economy like a hot cup of Maxwell House. Why, then, are we limiting the program to low-MPG clunkers if the improvement goals are so paltry? I have a 2000 Ford Focus ZX3 that deserves to die. It gets about 26 MPG, which is absolutely pitiful for a 2-door hatchback smaller than a Honda Civic. I think I could easily do at least 5 MPG better than that, and not even have to resort to heroic measures like hybrid technology.
So if it were me, I would (1) double the mileage improvement goal and (2) drop the maximum MPG requirement for the trade in. (1) would pretty much make (2) unnecessary anyways.
James River Bob on August 17, 2009 at 06:31 AM
They are clearely selling a lot of cars right now, but I have to imagine that the new car industry is going to be back in it's previous doldrums within a short period of this program ending.
many of these C4C customers are people driving older cars that would have ultimately traded up next year or or the year after. What congress has effectively done, is taken lots of people who were going to get new cars in the next 3 years to purchase them today. Fantastic short term plan, but kind of short-sighted don't you think?
Cookie the Dog's Owner on August 17, 2009 at 06:31 AM
I'm not convinced that C4C is "stimulating" new purchases as much as it is shifting them around in time--people who were going to trade in a car anyway in the early part of this year held off until C4C lit so they could get in on the government goodies; some people who would have bought later in the year accelerated their purchases for the same reason. The people who would have bough a car anyway got a nice windfall. Undoubtedly there were some people who bought a new car under C4C that would not have bought one otherwise, but I suspect the number is a small fraction of the total C4C purchases.
The one element of C4C that most disturbs me is the requirement in the regulations that the engine of a C4C trade-in has to be deliberately destroyed. The rules require you to drain the oil out of the engine, replace it with sodium silicate solution (liquid glass), and then run the engine until it seizes up. Not "pull the engine," not "dismantle the engine and recycle usable parts" -- destroy the engine. This is folly of the highest order:
1. If the purpose of C4C is to confer some net ecological benefit on the world, it fails because the ecological cost of building a new vehicle is greater than the ecological cost of keeping a less-efficient older vehicle running to the end of its useful life.
2. How can there possibly be any net economic benefit to a program that requires the deliberate destruction of usable machinery? There are YouTube videos of vehicles being trashed for purposes of C4C compliance--including several which looked to be in reasonably good working order. (Even those which are in "fully depreciated" may have engines or engine parts that could be salvaged for further use to keep other vehicles running.) One need not anthropomorphize the cars (and use language like "euthenasia") to see this as the inexcusable waste it is.
What's going on here is that a politically-connected industry (manufacturers and dealers) has arranged for a transfer from the public treasury, in a fashion which masquerades as some sort of clean-air-and-economic-stimulus project. (There won't be a C4C-equivalent for other industries and other categories of products because those industries don't have the same political "juice" the auto industry does.) It also gives certain members of the cultural elite a chance to indulge their nanny-state impulse to decide what the rest of us less-enlightened types should be driving, and do it with other people's money.
I would submit that this is not what the national government should be doing even in the best of times. We are already in a slow economy, and the government is expanding itself and its financial obligations at a furious pace, which will either result in higher taxes or in increased inflation, which has much the same destructive effect as a tax increase. In either case, the true cost of C4C and similar initiatives will be the opportunity cost it imposes on the private sector, all of the jobs that are not created, investments and charitable donations which are not made, products not brought to market or made more expensive, purchases not made, project cars not restored, and so on.
jdgjtr on August 17, 2009 at 06:51 AM
I would love to buy a new(er) vehicle but like Steaming Pile, I have a clunker that doesn't qualify. Our 99 Olds Alero in poor shape, probably gets 25 mpg on mostly highway driving and is frequently in the shop. On the other hand, our 95 Jeep Cherokee 6 cylinder, with 160,000 miles is in perfect shape for its age and only driven 2-3 times a week. The Jeep would have to be traded in, which would surely break the heart of many. Rather than the C4C and all the bureaucracy that entails, plus the disabling of perfectly good vehicles, why not allow car buyers to write the trade in value and interest of the loan off their taxes? Make it a stipulation that the vehicle be built in the last three years and get at least 30 mpg? I don't think that this program does anything for the environment but it would surely stimulate the economy.
epilonious on August 17, 2009 at 07:04 AM
My thoughts? It's a Mediocre program.
The opponents of C4C are lambasting it as a temporary measure which is obliterating the used car market and pointing out how those who didn't buy a series of gas-hogs are helping to pay for people who were fortunate enough to buy them... and the supporters of it are lauding it as an example of a big federal program that seems to be working ("See! People are taking free money and buying new cars with it!")
Both groups are right, and that's what bothers me about it.
Dave on August 17, 2009 at 09:54 AM
A friend of mine wanted to try and take advantage of C4C but couldn't because his current clunker hasn't been insured for the last year. On one hand the insurance requirement may prevent people from turning in junked, rusty cars that have been sitting in farm fields for years which I can understand. But if a car has been insured continuously for the last year, how clunky can it be? Doesn't seem to have been very well thought out.
Todd on August 17, 2009 at 10:05 AM
The thought of taking my tax dollars and giving them back to me as incentive to buy a new more "economical" vehicle is a bit disturbing. Just as most other government programs are wasteful, so is C4C. I agree all it is doing is shifting the buying timeline by a few months, later this year or next after all the money has be appropriated, car sales will crash.
Kev on August 17, 2009 at 10:30 AM
I think the program is absolute BS, it punishes frugal people like me who a) have always driven 3 or 4-cyl small cars; b) take care of their own cars and do their own repairs, making the cars last 3-4x longer than most people; and c) don't purchase new cars because of their ridiculous depreciation and because we can make a car last a good 15-20 years.
I'm 36, have never owned a new car, and don't feel the need to advertise my station in life by the car I drive. Neither one of my cars gets anywhere near the 18MPG cutoff; yet one is almost 20 years old and on its' last leg (a Geo Metro) (I just fried the clutch) and one has about 240,000 miles on the odometer and gets 30-36MPG. I'd love to trade them both in to get a newer car but I can't, simply because I never felt the need (or desire) for a gigantic SUV or V8 gas guzzler. [deleted, political] My approach has always had the least environmental footprint and you want to punish me and reward the polluters.
Also it's making parts harder to find for guys like me who fix their own cars. If I could get $4500 off just like the people who buy new cars every 4-6 years I'd be pretty happy....now I get to pay more for recycled and used auto parts thanks to the huge strain you've put on the salvage yard industry. Thanks a lot.
OldCarGuy on August 17, 2009 at 11:46 AM
I frequently drive through a Honda dealer's used car section, just to see if there is anything of interest. Normally there isn't. But last week at the end of the row I spied an old dark green Jaguar XJ6. My interest peaked, I began to pull in for a closer look when, you guessed it, painted on the windshield was "NOT FOR SALE - CLUNKER." Decent paint, nice tan leather interior, I wouldn't be ashamed to drive it around town and park it in MY driveway. But sadly it'll never grace the highways again.
DoctorJay on August 17, 2009 at 12:15 PM
I'm against the program because I think it's a waste to deliberately destroy mechanically functioning vehicles.
However, what I find most disturbing about the program is the fact that it is a declarative statement that Detroit produced garbage as recently as 10 years ago. It's basically the government making planned obsolescence into public policy.
You lobbied congress to keep fuel standards down? Great, Detroit, now we'll help you out from bankruptcy, declare your cars garbage, then give the public cash so they'll take out car loans from you.
Hey Joe Public, you bought that Hummer 'cause you didn't care about the effect on the environment or how much gas it guzzled? Great, here's $4500 to buy a car with 22MPG.
Vox Locus on August 17, 2009 at 12:16 PM
The IDEA is to reboot the car FACTORIES.
The IDEA is to put people to work building cars, building car parts, selling cars, financing cars.
I don't have a clunker. I wish I did so I could, as one of my friends did, trade it for a shiny new zippy Mini, or some other safer, modern, fun car. Even a not so fun Prius, Focus, etc.
GM isn't making any more terrible 1991 Caprices? Hallelujah!
Parts for old cars may be harder to find? Possibly true. But the rule isn't that all parts have to be destroyed. Dismantling the car is probably adequate, so some parts may even become more readily available.
In the scheme of things, $3 Billion is petty cash. If it gets Americans spending money, reducing oil imports, and takes some half-derelict stinkers off the highway, sing Hallelujah!
Just stop whining. There's more than 250 million passenger vehicles in the United States. At its best, "Clunkers" is only taking a few hundred thousand of them off the road. If there's a gas guzzling 1991 Caprice worth saving, it is worth more as a 1991 Caprice than a $4,500 credit. If not, PLEASE put it out of its misery.
nick D. on August 17, 2009 at 01:11 PM
I'm not a fan of C4C, especially after I saw a perfectly healthy Jeep Wagoneer marked for destruction.
I thought it would be a better idea to issue vouchers to owners of "Seasoned" vehicles for cold air intakes and performance headers/exhaust. As my understanding this would bring the mpg up on most vehicles to an agreeable level. It would put money in the pockets of small businesses and shops, and would cost a lot less money. Besides most people are trading up to an SUV that gets just another 2 or 3 mpg.
Thoughts?
Bruce Rheinstein on August 17, 2009 at 03:52 PM
Seriously, the amount of money involved is tiny compared with the $100 billion, or so, spent on the Chrysler and GM bailouts. It's a feel-good gesture for those who need to see the government doing something, anything...
Mike Rulle on August 17, 2009 at 04:15 PM
As many have written elsewhere, and is obvious in anycase, Cash for Clunkers is truly and sadly pathetic.
It is sadly pathetic to me, because some people somewhere actually think this is good for the economy. Others are just trying to get a chunk of free money. How did we get here? The [people who passed the policy] seemingly never heard of the "broken window fallacy", which anyone with access to a computer, google, and/or Wikipedia can easily understand.
I am sure that there are many who might respond that the "BWF" is not nuanced enough. With a $2 trillion deficit, it is plenty nuanced.
bgates on August 17, 2009 at 04:21 PM
But the rule isn't that all parts have to be destroyed. Dismantling the car is probably adequate
Well, the engine part has to be destroyed. That's a pretty significant part of a car.
It's true that the vast majority of the cars being destroyed have less than $4,500 resale value; that means the only people who will have trouble buying a used car are people who wanted to spend less than $4500. Once upon a time there was a political party that was very interested in people like that.
ic on August 17, 2009 at 04:27 PM
As a matter of fact, a major reason that I didn't take the Clunker deal was I didn't want my 2000 Jeep Grand Cherokee Laredo destroyed.
Zinhead on August 17, 2009 at 04:27 PM
This program is a blatant waste of money. We are borrowing $4,500 per car from the Chinese to help someone buy a vehicle most likely made by a Japanese, Korean and German company. [meta politics]
Seamus on August 17, 2009 at 04:32 PM
C4C is a bad idea. I looked up my 3 cars to see if they qualified. 76 chevy blazer, too old. 99 grand am (total beater inside and out) CARS said it gets 20 mpg, too fuel efficient. 02 Rodeo LSE (beautiful inside and out) CARS says bring it on down for 3500 bucks. That would have trashed the best of the bunch.
sjphoto67 on August 17, 2009 at 04:49 PM
Yup! It's stealing from future purchases.
I moved up my purchase and trade-in because of the program by at least one year.
I bought a Mercury (Ford) vehicle
chrisb on August 17, 2009 at 04:54 PM
I decided not to take advantage of the policy for a variety of reasons, first being I have a job, have savings, why should I take money from others to buy a new car for myself? It just rubbed me the wrong way.
But there are other reasons. I was brought up to care about the environment. When my window unit air conditioner broke I called all over the city trying to find someone to repair it, everyone thought I was crazy and should buy a new one. I thought, even if the cost is the same I'd rather repair it. Building new things costs energy and resources. Throwing out working things is bad for the environment.
So along comes this program, supposedly good for the environment, that encourages waste and overconsumption? Throw away a working car that a poor family could buy and use, and replace it with a shiny 20mpg SUV? Yes you can buy 20mpg cars under this program, that's hardly saving gasoline, plus the factories that built the car used energy, I've read the average energy equivalent is 6.7 tons of carbon to produce a car (even if it's powered by solar or wind, it still takes that much, because that power could have been used for something else that an oil plant powered). Finally hybrids have the added problem of using nickel from mines in Canada that are horribly toxic. There is no free lunch.
But the worst reason is it hurts poor people. That's a car worth $2k or so, that a poorer family than me could buy and use, and they do. People say "no one would pay this for my car" but the blue book value IS what people pay, people who have a need for a cheap car. Without those cars to buy, the supply goes down, and the price of remaining used cars goes up.
So who does this plan help? Not the poor, not the environment. It helps car companies and the auto unions, and no one else. Of course it's popular, it's giving away money! But it's not free, it came from our neighbors, and even increased the cost of cars to the poor.
notamerican on August 17, 2009 at 04:58 PM
[partisan, off-topic, meta-political]
John Duncan on August 17, 2009 at 05:05 PM
Imagine how they feel in Cuba! They could upgrade their fleets by 20 or 30 years if we just sent the clunkers down there. This is a travesty, screwing lower income people.
Lockestep on August 17, 2009 at 05:05 PM
I don't like the program at all, but for an additional reason to those listed above. Many people who are driving qualifying cars really should not be taking on a large car payment in this economy. Overborrowing helped drive this recession, and enticing people on the hairy edge of solvency to pony up for five years of $500 a month is bad economic policy.
Jack on August 17, 2009 at 05:10 PM
I have two kids in college. I just upgraded their high school transportation specials with under $3,000 cars. My daughter got a 97 Bonneville. Full dress, has everything. She'll take it to school with her. My son got a...wait for it...95 BMW 540i. Not cherry, but pretty good condition. I'm jealous.
[deleted, partisan]
All of my money goes to tuition. I can't afford car payments. Cash for Clunkers only helps rich people.
Dan Davis on August 17, 2009 at 05:14 PM
Perhaps the Government should have taken an idea from A Door Into Summer. Just buy a bunch of new cars from Gm/Ford/Chrysler, and scrap them. Keeps everyone employed.
or better yet: Buy every Volt CM can make, and lease them out, lease payment determined by your income.