The Cash for Clunkers program, according to the CAR Allowance Rebate System (CARS) website, is a $1 billion government program that will give you either $3,500 or $4,500 towards a new, more fuel efficient, car when you trade in your old junker – provided it meets the standards, of course.
Those standards are pretty specific, however. Your trade-in cannot be older than 25 years. It must have been insured for at least one year preceding the trade in. It must get 18 miles per gallon or less (large pick-up trucks and cargo trucks vary a bit). Your new car must be new. It must have a rating of at least 22 MPG and must be at least 4 MPG higher than your older car to receive a $3,500 rebate. To receive the full $4,500 rebate, the new car must be at least 10 MPG higher than your trade-in. If a car is traded in the dealer must destroy the engine with sodium silicate, destroying any chance of recycling the engine. Oh and by the way, your new car cannot exceed $45,000. So Lexus hybrids are out. You cannot purchase a used car, even a used Prius or any hybrid for that matter.
This list of requirements is apparently to “energize the economy; boost auto sales and put safer, cleaner and more fuel-efficient vehicles on the nation’s roadways.” Let’s just see how that stands up to scrutiny, shall we?
Well, let’s go through how cars are made. It starts with you, Joe Whoever, who is willing to pay for an environmentally friendly car via trade-in. Steel needs to be ordered to make your car, so ore miners are contracted. They find ore, mine it and ship it to the steel mills. The ore is then processed into steel or some variant and is again shipped. This time, it’s shipped to a factory where the steel is fashioned into the car’s frame. Then we need to get to work on the engine. Call up the aluminum factory in China then get a hold of the various plastic, fabric, and silicone (for the computers that monitor your fuel, speed, etc.) factories all over the world to put some seats in your car. Collect, process, and finish. Then, of course, ship it overseas to America. Put the car on a train, then a truck, and then finally park it in the car dealer’s lot till it’s sold. And that’s just if you buy a plain car.
With hybrid cars you have to order two engines – one for electricity, the other for gas. Oh, and add on the cost of manufacturing batteries and you have the same result for lower emissions.
However, there are many used cars that have high mileage ratings. Take, for example, the Toyota Echo, or the Honda Civic. In 2000, both cars had a combined 32 and 30 MPG rating. The 2009 Nissan Altima Hybrid has a 34 MPG rating. By the way a ’92 Ford Festiva has a 33 MPG rating.
Rob Ingls, of The New Republic, even suggests the production of greener cars, can offset any gains.
“According to a literature review by the Pacific Institute, somewhere between 10 and 20 percent of the life-cycle carbon emissions of the average car come not from driving but from manufacturing and disposal. If a “cash for clunkers” program helped speed the replacement of America’s car fleet—and thereby the rate at which new cars had to be produced—the reduction in tailpipe emissions would be at least partially offset by an increase in manufacturing emissions.”
So what then is the Cash for Clunkers program about? Well, simply put, it’s about moving cars off of the lot during a recession. In fact, this isn’t the first Cash for Clunkers program. Germany started their clunkers program at the beginning of this year with great results. Cars sales went over 20 percent during February. However, what works in Germany doesn’t always work here. As Keith Johnson of the Wall Street Journal points out, the success in Germany depends on the situation in Germany.
“Take gasoline prices, which in Germany are among the highest in Europe. Even with cheapish oil, pump prices in Germany are still close to $6 a gallon today. That, as much as any cash-for-clunkers program, pushes people into compact cars. But the idea of a bigger gasoline tax hasn’t got much political traction in the U.S.
Germany is also introducing a special carbon-emissions tax on new cars this summer, six months ahead of schedule. That means that buyers of big vehicles that emit more CO2 will have to pay fees upward of $1,000; buyers of tiny, fuel-sipping cars will face fees under $50. That has also driven appetite for smaller cars.”
America and Germany aren’t the only places with modernization efforts. China, Japan and England are a few other countries with established programs as well.
When car owners see $3,500 to $4,500 off of a new car, at the behest of the government no less, they perceive a good deal. In reality, anyone can find a used car that gets higher MPG than most new cars. The draw towards the Cash for Clunkers program is simply getting $4,500 off of a new car to subsidize an industry on life support.
However, $4,500 off of a new car may not be enough for someone who’s driving a clunker around in the first place. And given the arbitrary qualifications for the program many people may show up to dealers only to be turned away. However, for the eligible few, the program may actually be a good deal. As Joseph White of the Wall Street Journal points out, deals can be made – despite the caveats.
The problem with the Cash for Clunkers program is that it tries to please too many camps at the same time. By being indecisive and compromising between environmentalists and the auto industry the Cash for Clunkers program will stay where it belongs – on the blocks.
