It's a short-sided plan. It does nothing to speak of for the environment (as a whole); it is not an investment in infrastructure (fixed costs upon which one can expect a return) but instead is straight consumption. And it's not a “jobs” program. It's like a sugar high – a spike in demand due to an artificial stimulus. Just like with a sugar high, demand will drop lower than it was before this when the plan peters out, and it will not lead to any long term demand increase. In addition, it will *hurt* the used car market in two ways: it will reduce inventory of used cars (because the trade-ins are being “salvaged”) and thus it will increase the price of used cars, hurting a significant portion of the US population (since normally more used cars are sold than new ones).

Henry
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http://www.cashforclunkersfacts.info
http://www.cashforclunkersfacts.info

I believe you have missed my point. Trucks, which comprise more than 50% of the vehicles on the road in the US, do not have to meet the 18/22 rule.

I disagree with the premise in your initial comment that the gov't should have a goal of 'increasing sales' for any car or truck. Even if you discount the MPG (which for all intents and purposes, Congress did), Congress limited the dollar value of the MSRP, which immediately excluded vehicles like Hummers and Jaguars.

RE your assertion in comment 2, “that 22 miles per gallon is not a very poor figure,” note that my *1987* (22 year old) Mazda 626 averaged far better mileage than 22 mpg. Let me repeat that: 22 year old vehicle got better mileage than your “not very poor” assertion.

RE comment 3, I did not say that people should not be able to trade a truck for a truck. I am reminding people that more than 50% of the “cars” on the road ARE TRUCKS because mini-vans and SUVs are classified as trucks by the government, even though they are generally thought of as CARS by normal people. I don't like this plan at all, but if we *had* to do it, IMO we should not be providing borrowed taxpayer assistance for vehicles that get less than 30 mpg. And if that doesn't help Detroit, tough.

This is not a “jobs” program. It's like a sugar high – a spike in demand due to an artificial stimulus. Just like with a sugar high, demand will drop lower than it was before this when the plan peters out and it will not lead to any long term demand increase. In addition, it will *hurt* the used car market in two ways: it will reduce inventory of used cars (because the trade-ins are being “salvaged”) and thus it will increase the price of used cars, hurting a significant portion of the US population (since normally more used cars are sold than new ones):

Used cars sold through franchised dealers comprised 49.7 percent of industry-wide sales, including new cars, through November, compared with just 47.3 percent for the same period of 2007, according to an Edmunds.com analysis. And by the same measure, used cars sold through franchised and independent dealers together comprised 65.2 percent of all industry sales including new cars, through November, compared with just 64.1 percent a year ago. (Feb 2009)

“The car you trade in must get 18 miles per gallon or less — but the car you drive off the lot can have a fuel efficiency rating as low as 22 miles per gallon.”

Most of us still see 22mpg as pretty low gas mileage, but it's very important to remember that the mpg method of measuring is kind of misleading, in that there is a law of diminishing returns. In fact, it is way better to get the worst offenders off the road and replace them with only slightly better vehicles, than to replace all the medium-efficiency vehicles with 100mpg hybrid/electrics. Going from 18mpg to 22mpg will save over a gallon of gas (and resulting tail-pipe excrement) for every 100 miles driven. Using the numbers of 16mpg to 26mpg, you save 2.4 gallons per 100miles, which is huge. Just replacing 1 vehicle like that will give you the same bang-for-your-buck as replacing 3 Nissan Altimas (30mpg) with Toyota Priuses (50mpg). Much, much less expensive. I don't think we should even be thinking about subsidizing replacing anything that already gets over 20mpg for exactly this reason.

“But vehicles are NOT being recycled or saved, they are being destroyed.”

Technically, they're being destroyed and the materials are then recycled. I know that recycling does require energy (reforging and such), but the calculations were done (ugh…I should probably find a link) to show that this energy was more than made up for by not having the “clunker” on the road.

There's nothing wrong with this. (On the other hand, something is quite wrong with people who find it truly offensive, or who find trucks as personal transportation truly offensive, etc.) Ford, for example, wisely chose to proceed these past bleak years on developing its new F-150, for many us who drive trucks like to drive our trucks or (in the real world, at least) _need_ trucks. Ford is poised to exploit this, as well as now benefit, hopefully, from any government incentive program. (It is also working on a “global pickup truck” that is smaller and should appeal to a lot of people here in the USA as replacements someday for current compact pickups.)

1. Note the percentage (relative) increase in efficiency with the exchange you presented here.

2. The real defect* of the program is that it has any fuel efficiency requirements _at_all_. It simply should be a program to encourage buying vehicles, _any_ vehicles that are desired, to increase sales the most.

* That's aside from the higher-level question of whether government should ever do such a thing at all.

Based on the cited article AND the advertisement I found, yes, we are paying people to trade in trucks for trucks.

There is no citation for the “early analysis” claim. Not your fault; very poor reporting. And as CNN notes (below), that data is probably slanted because of the way the government “counts” sales.

CNN reported that Edmunds research “showed that two full-size trucks and a small crossover SUV were actually among the top-ten buys.”

Sales of GM's Silverado truck, under the government's counting method, were divided among five different versions. So were the Ford F-150s. If the different versions of these trucks were considered the same vehicle, as auto sales are normally reported, sales of these trucks would look much heftier.

In the Cash for Clunkers program, trucks are actually subject to lower fuel economy requirements than cars, so it surprised many analysts that trucks weren't more popular. (emphasis added) </bockquote>

Also, this NYT article from today references “cars” but not trucks:

The car you trade in must get 18 miles per gallon or less — but the car you drive off the lot can have a fuel efficiency rating as low as 22 miles per gallon.

Finally, in another bit of Orwellian-speak, the bill's official name is “Consumer Assistance to Recycle and Save (CARS)”. But vehicles are NOT being recycled or saved, they are being destroyed.

I'm even more disgusted than I was when I wrote this post initially.

Trackback from PunditKix.com…

We give a guy $4500 of taxpayer money to trade a truck getting 15 mpg for one getting 17 mpg?

The rules for CARS doesn't work that way: See page 94
http://www.cashforclunkersfacts.com/cash-for-cl…
Most buyers are trading old truck, suv's for compacts like the Ford Focusd, Dodge Caliber or foreign compact.

Could find the list, but this Tampa article has this:
http://www.tampabay.com/news/business/autos/art… analysis of the program found consumers opting for vehicles that deliver higher mileage, with a 15.8 mpg average fuel economy rating for trade-ins, compared with an average of 25.4 mpg for the new cars being purchased.

“and they won't give any incentives at all to trade in an '89 Taurus wagon (18.5 mpg) on a hybrid Fusion”

Doubly insane.