Cash For Clunkers 2.0?
Depending on who you ask, Cash for Clunkers was either a spectacular success, or a spectacular failure.
These are the facts though. Cash for Clunkers helped sell 690,000 car sales in 30 days, at the cost $3 billion to taxpayers. While overall auto sales are down in 2009 compared to 2008, December was a strong finish for almost every brand. In the four months since the program, car sales have also been up as a whole. Chrysler and General Motors are out of bankruptcy. 2010 is looking like a much better year for car buyers.
Still, the question lingers. Are we going to get a second round of Cash for Clunkers?
>> Interested in solar power? See if group discounts are available in your city
>> Don’t forget to: Sign up for our electric car interest list.
At the opening of the 2010 North American International Auto Show in Detroit last week, Transportation Secretary Ray LaHood (the same guy proposing changes to the way public transportation projects are proposed and financed) seemed pretty happy with how Cash for Clunkers went, saying, “This was the most wildly successful program ever, selling 800,000 cars in less than 30 days. You see no criticism of Cash for Clunkers in America.”
Umm, apparently LaHood missed the analysis by Edmunds, which stated that C4C did little to spur new car sales. Of the 690,000 cars sold during C4C (where LaHood got that extra 100,000 I don’t know), Edmunds says that 565,000 of those would have been sold anyways. New car buyers trading from inefficient gas guzzlers getting 18 mpg or less to fuel sippers qualified for either a $3,500 or $4,500 dollar tax credit. It is hard to know for sure how many people actually bought cars because of Cash for Clunkers, and if this really did rob from future sales. But if you follow Edmunds train of thought, the cost per-car sold to the government was about $24,000.
But criticism is healthy, right? It could help shape a better, more streamlined Cash for Clunkers program in the future. And with the economy stagnant at best right now, a second stimulus and another round of clunkers might be in the works for the Obama Administration. And it could help. I’m no economist, so this is all speculation of course. Still, few things put a smile on a potential voter’s face like a fat government handout. Chances are, IF Cash for Clunkers came back, the incentives would be less, the process more streamlined, and hopefully the mpg requirements a little more lenient.
Still, most of the automakers finished 2009 up over 2008 levels. Ford posted a whooping 33% gain in December of 2009 compared to December of 2008. The economy has leveled out a bit. Most importantly, automakers are coming out with MUCH better cars in the next few years, including a bevy of electrics and hybrids.
What do you guys think? Cash for Clunkers Round Two? Or should we just leave well-enough alone?
Sources: Motor Trend | Edmunds | Image: Chris DeMorro
You Might Also Like
California’s Clean Vehicle Rebate Project Launches Today; Save $5,000 On an Electric Car
California Will Change “Cool Cars” Law in Response to Police Concerns
Cash For Clunkers More Successful Than First Thought?
Brazil’s 10 Millionth Ethanol Flex-Fuel Vehicle Hits the Road
January 18th, 2010 at 12:54 pm
The program appears to be a mixed bag, with some benefit coming from the move to more efficient cars, although the cost to do so seems quite high. In the end I think it illustrates how badly our economy was damaged by the financial crisis, needing infusions at every turn to keep the country out of a depression.
January 18th, 2010 at 1:55 pm
It seems to me that C4C has three goals:
1. get people to buy cars to help the automakers
2. get people to buy more fuel efficient cars
3. general economic stimulus (related to #1)
There might be better ways to accomplish any one of these goals, but put the three together and C4C makes sense to me.
January 18th, 2010 at 5:27 pm
One thing should be clear. The value of our cars is going down fast. Repossessions are dragging down values and this is why C4Clunkers make no sense. Go look at what Credit Union repo cars are selling for at http://www.repofinder.com and then tell me why automakers are cranking out new cars like there’s no tomorrow and people are still paying retail prices for new cars. I foresee many more repossessions on the horizon.
January 18th, 2010 at 9:42 pm
“Cash for Clunkers ws an unmitigated failure. It generated annother huge expense for the federal government while only pulling car sales foreward a month or two. The cost greatly exceed any possible benefit and the failue to sell efficiency was clearly nother loss.
We certainly do not need another one.
January 19th, 2010 at 6:17 am
As usual, government handouts are viewed as “free money” by the populace. At $24,000 per car sold,the C4C program was horrendously wasteful. Also, as usual, the government has done nothing to rein in the swindlers, criminals and cheats on Wall Street who caused the whole mess. All the government ever knows how to do is throw money at problems. Why worry? We can always print more, right? Right? Hello?!?!? Can you say “China”, boys and girls?
January 19th, 2010 at 7:35 am
Yes it was a success. It got the worst of the fuel inefficient cars off the road. That will save the nation money on future wars unfought, and climate change that can be prevented. Yes, it is worth the money to do it again.
It will be interesting to see the transport emissions data that will be out in December of 2010, covering 2009.
It was policy founded on good science that showed that (surprisingly enough) swapping the worst guzzlers (like 10 mpg) for a merely medium bad(20 mpg) saves more fuel than swapping a pretty good (40 mpg) for a great fuel saver (50 mpg Prius).
January 19th, 2010 at 10:00 am
“It was policy founded on good science that showed that (surprisingly enough) swapping the worst guzzlers (like 10 mpg) for a merely medium bad(20 mpg) saves more fuel than swapping a pretty good (40 mpg) for a great fuel saver (50 mpg Prius).”
This has been GM’s and Ford’s position on hybrids since the start. Why make hybrid small cars like Prius/Insight when bigger vehicles like trucks/SUVs (and buses) are the biggest fuel wasters? Make hybrid trucks/SUVs (buses), instead.
January 19th, 2010 at 1:24 pm
Chris – When did GM get out of bankruptcy? Didn’t they just get another multi-million dollar government loan a couple weeks ago?
January 23rd, 2010 at 9:51 am
The rebates for trading in low MPG vehicles was a good idea. I think another good idea would be to index federal and state fuel taxes to a time when Bill Clinton was president. The tax should be a percentage of the price of fuel. Raising the taxes on fuel, with deductions for commercial use, would probably have the same effect as the “C4C” program. The tax hike should be directed to paying off the Iraq war, cleaning up old oil towns and fields, and generally reducing our consumption, in the spirit of reducing the “carbon footprint”.
January 23rd, 2010 at 4:19 pm
Ford’s up 33% That’s the big number here. They didn’t take any government money when the slush fund was waved in front of their nose (We want our money back…oh wait). By the way. What have we accomplished by the move to hybrids? Has anyone ever thought to ask how batteries get disposed of when they need replaced or become inefficient? Or better yet. How much does it cost to replace one of these Prius batteries? Mark my words, the next Clunker program will be the batteries from these trendy little cars. How much pollution does it take to get a NiMh battery to the market? How efficient is it over it’s whole life (not just show-room stats)? How much does it cost to dispose of these toxic batteries? We’ll need a program just to keep these out of our water cycle! Gas guzzlers? It’s the cool-aid guzzlers I’m worried about. I just hate seeing tax dollars wasted on speculation.
February 15th, 2010 at 5:35 pm
The folks who dislike C4C are usually Rush Limbaugh’s braindead dittohead groupies, and others similarly affected by the GOP’s propaganda pushers on right-wing radio.
George W. Bush planned to do nothing to assist our domestic Auto makers and would have let them go bankrupt and into oblivion. Obama saved GM and Chrysler, as Ronald Reagan similarly saved Chrysler and Harley Davidon in the 1980s. Where were the dittoheads and teabaggers when Reagan threw out the lifeline twenty plus years ago?
Anything Obama tries to do the mindless GOP walking dead automatically resist, especially if it helps America recover from the mess that George W. Bush made.
C4C kept what’s left of our domestic manufacturing economy humming as auto makers cleared long unsold new car inventories in only 30 days.
C4C helped keep fuel prices in check as hundreds of thousands of giant gas guzzlers were taken off our roads and replaced with fuel efficent vehicles.
C4C had many other helpful and long lasting effects, including cleaner air, and the multiplier effects of new car sales and the accompanying taxes they brought into local municipalities, along with the services that go hand-in-hand with new cars sales; including auto insurance, paint & body shops, parts suppliers, etc.
Another round of C4C would be another shot in the arm for the American economy, but the program should be tweaked to help those most in need, as higher subsidies should be focused toward those with modest incomes and qualifying vehicles.