Cash for Clunkers

[CSpec]

Source

OK. Let me get this straight. I can get $4500 toward a new car as long as my old car gets terrible gas mileage. Well, I’ve got a 1996 Civic, which gets 30-something MPG. But it’s worth less than $4500. So I guess I should sell it for what it’s worth ($2-3000) maybe, buy a total piece of $h! for as cheap as possible, and then exchange that for $4500 off a new car? I’d be several grand ahead. Of course, most of the models of new car I’ve got my eye on get worse mileage than a 1996 Civic. So if this plan induced me to buy a new car when I wasn’t going to, which it might, and I get the kind of car I think want, taxpayers will have paid me $4500 to drive a nicer but less fuel efficient car than I’ve got. Thanks democracy!

Or maybe I should just buy a clunker, get the trade-in, then instantly sell the brand new car for $2000 off sticker and pocket the rest. Anyway, better move quick. Lemons go fast when everybody’s thirsty for lemonade.

[Camino LS6]

That guy didn't read the proposal.

His comments are way off from the reality of it.

[A Horse With No Name]

In reply to the proposal in some ways it doesn't look that bad.

Chris

[Northstar]

You have to have paid insurance on the car for at least 1 year for the car to be eligible.

[Camino LS6]

We'll have to wait and see what the Senate does with this.

[CSpec]

You have to have paid insurance on the car for at least 1 year for the car to be eligible.

Yeah, this blogger didn't research this very carefully. Still, this program isn't going to be all that effective at improving the average mileage of America's rolling fleet and will just send a check from the Treasury to people buying a new car.

[Northstar]

Yeah, this blogger didn't research this very carefully. Still, this program isn't going to be all that effective at improving the average mileage of America's rolling fleet and will just send a check from the Treasury to people buying a new car.

The bill the passed the house also said the car had to be a 1984 or older model year vehicle. How many people with such an old car (26+ years) that is actually in driveable condition (another requirement) have the money to buy on a new car. And once you get older than about 1975 or so the cars start to become "classics" that people wouldn't dare trade in for $4500. So this proposal affects very, very few people.

1) Car must have been insured for 1 year - eliminates those looking to buy a beater and get $4500 for it

2) Car must be 1984 MY or older - how many people who drive such a car on a daily basis have $10k+ laying around for a new car? There's a reason they aren't already driving a car that's more modern than a 26+ year old clunker

3) This really affects no cars that are newer than 1970 and even 1975 in some cases. So you're targeting a 9-15 year old set of cars, with owners that meet the two above criteria

[SAmadei]

The bill the passed the house also said the car had to be a 1984 or older model year vehicle. How many people with such an old car (26+ years) that is actually in driveable condition (another requirement) have the money to buy on a new car. And once you get older than about 1975 or so the cars start to become "classics" that people wouldn't dare trade in for $4500. So this proposal affects very, very few people.

1) Car must have been insured for 1 year - eliminates those looking to buy a beater and get $4500 for it

2) Car must be 1984 MY or older - how many people who drive such a car on a daily basis have $10k+ laying around for a new car? There's a reason they aren't already driving a car that's more modern than a 26+ year old clunker

3) This really affects no cars that are newer than 1970 and even 1975 in some cases. So you're targeting a 9-15 year old set of cars, with owners that meet the two above criteria

The other thread mentioned that cars needed to be 1984 or later... not earlier. So it's 1984 to present. I wonder if this will be a rolling 25 year window... obviously, this is here to prevent raising the ire of collectors and SEMA who argue the cars older than 25 years make up a fraction of a fraction of a percent of the total miles driven.

As in the other thread, you need to have a MPG of 18 or worse... even my '95 Caprice wagon was EPA combined rated at 20 MPG. The people who tossed together this bill are completely out of the loop on understanding that cars have gotten pretty good mileage for the past 25 years.

[Z-06]

The people who tossed together this bill are completely out of the loop on understanding that cars have gotten pretty good mileage for the past 25 years.

Or may be not giving away money was part of their hidden agenda? Regardless, the actual bill has lost much of its steam since inception. I do not think many will take advantage of it.

[pow]

It does seem like a carefully crafted policy designed specifically to change the composition of our nation's fleet, in addition to increasing new car sales. Only gas guzzling beaters qualify for this incentive, and the replacement vehicle must show an increase in fuel economy. Extending the program to all vehicles, not just gas guzzlers, will create a price floor for used passenger cars, so thankfully, this isn't the case.

[pow]

The other thread mentioned that cars needed to be 1984 or later... not earlier. So it's 1984 to present. I wonder if this will be a rolling 25 year window... obviously, this is here to prevent raising the ire of collectors and SEMA who argue the cars older than 25 years make up a fraction of a fraction of a percent of the total miles driven.

As in the other thread, you need to have a MPG of 18 or worse... even my '95 Caprice wagon was EPA combined rated at 20 MPG. The people who tossed together this bill are completely out of the loop on understanding that cars have gotten pretty good mileage for the past 25 years.

According to fueleconomy.gov, your '95 Caprice Wagon gets 18 mpg combined, so it qualifies under the program.

[Z-06]

It does seem like a carefully crafted policy designed specifically to change the composition of our nation's fleet, in addition to increasing new car sales. Only gas guzzling beaters qualify for this incentive, and the replacement vehicle must show an increase in fuel economy. Extending the program to all vehicles, not just gas guzzlers, will create a price floor for used passenger cars, so thankfully, this isn't the case.

While it is part of the program, the underlying reason was to generate a boost to automotive sector similar to what Europe did 6 months ago. The main problem I see is what if a poor person who is stuck with a 1995 Corolla that is breaking down in any possible direction wants to buy a new vehicle? Is it not a clunker? What if a person has a is driving broken down oval eyed Taurus and wants to upgrade to a more fuel efficient vehicle? Those people were covered in the original plan, it seems not anymore.

They wanted to actually get rid of the used cars and not create any used car market.

The Cash for Clunkers bill is just one of the incentives the government is trying to implement to bring the U.S. auto industry back to its pre-recession levels. Now, the Cash for Clunkers scheme has garnered the approval of both House and Senate negotiation teams, with the two sides reaching an agreement on Thursday.

The approval came as part of a larger $106 billion wartime spending proposal - out of this amount, just $1 billion was set aside for the Cash for Clunkers program, or less than 1%. In reality, the full cost of the program is expected to be around $4 billion, but the $1 billion allocated should be enough to run the program until the end of September this year, reports The Detroit News.

The stipulations in the program are largely the same as that being proposed when the program was first scrapped in the U.S. Senate for giving Detroit too much of an advantage over foreign car manufacturers with local production facilities. The recently agreed upon scheme carries on the same proposal for vouchers of up to $4,500 for new car buyers who exchange gas-guzzlers for gas-sippers.

The new program will only affect owners of old cars that cannot achieve above 18mpg in their combined cycles. If these owners swap their cars for a new car that is at least 4mpg more efficient, they will be eligible to receive a $3,500 voucher from the government. The full $4,500 is only available to those who improve their gas mileage figures by 10mpg or more.

Trucks use a different system, where the new truck that is being purchased must achieve at least 18mpg and also be 2mpg more efficient than their current vehicle. This would garner owners the $3,500 voucher, while those improving their mileage by 5mpg would get the full $4,500.

Combined with new tax breaks from the government that eliminate local and state taxes, the government is significantly absorbing the costs of new cars to keep the auto industry viable through the recession.

[SAmadei]

According to fueleconomy.gov, your '95 Caprice Wagon gets 18 mpg combined, so it qualifies under the program.

In 1995, it got 20 MPG. Those are the revised EPA figures, from when they changed the recipe a couple years ago. I actually posed the question on which figures would be used in the other thread. In any case, using either EPA formula, there are few cars that will qualify... a few B-Bodies... which are likely owned by enthusiasts that know that GMNA 2009 builds nothing that can replace them.

[Camino LS6]

I predict a model year modification in the senate version.