I know that I’m late to the ‘cash for clunkers’ debate/discussion, but this is insane:

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

Take Damon Ogle’s 1992 Chevy Cheyenne pickup. It’s got 206,000 miles on it. But it’s one of those old trucks that has had its oil changed with a regularity the faithful reserve for going to church.

Ogle swapped it out for a new Ford F-150 pickup. Because both are trucks, the uptick in gas mileage from 15 mpg to 17 earned him $4,500 from taxpayers off the new truck’s price.

The 2009 F150 (usually overly-optimistic) mileage data: 14-15 city / 19-20 highway (depending on model). That 1992 Chevy: 15-17 city / 19-23 highway (depending on model; research suggests Westneat is referring to a 1992 Chevy 1500). Looks like a toss-up to me. (And an indictment of Detroit and Congress — no significant mileage increase in 17 years?)

The base F150 MSRP is $20,815. That means the taxpayer subsidy is more than 25 percent of the cost of the truck! Amazingly, with all the rebates available, one Renton, WA dealer advertises a $24,999 (MSRP) F150 for $11,290.

Moreover, the (new! improved!) 2009 model no longer has a V6 option; the base model is now a V8.

The Ford F-150 was redesigned for the 2009 model year. The base 4.2-liter V6 from the previous generation has been replaced with a 248-horsepower 4.6-liter V8. The two other available V8 engines are a high-output 4.6-liter (292 hp) and a 5.4-liter (310 hp). The base 4.6 is paired to a four-speed automatic transmission, while the high-output 4.6 and 5.4 are mated to six-speed automatics.

As used car dealer Cory Thal notes in Danny Westneat’s column:

“I think giving people a gift because they drive a piece of crap, and then encouraging them to go further into debt, is the kind of thinking that got us into this mess.”

Amen.

Update (7.31 pm Pacific):
You can get $3500 for a new truck with only ONE MPG improvement! See for yourself.

It also isn’t possible to trade in a vehicle that is truly “a clunker” — because vehicles >25 years ARE NOT ELIGIBLE.

Folks need to remember that SUVs are defined as trucks, not cars, because of their chassis. According to The Guardian, SUVs account for six of the top 10 trade-in models; two models are mini-vans (also truck bodies) and the final two are trucks.

That means that the top 10 vehicles being traded in have a very low MPG threshold to be eligible for $4500 of our grandchildren’s money (don’t forget, we are BORROWING this money – robbing Peter to pay Paul, my mother would have said).

From the rules (pdf)

A “category 1 truck” is a non-passenger automobile. This category includes sport
utility vehicles (SUVs), medium-duty passenger vehicles,7 small and medium pickup
trucks, minivans, and small and medium passenger and cargo vans.

What are the trade-in requirements for Category 1 Trucks?

  • the trade-in must have a combined fuel economy value of 18 miles per gallon or less
  • the new vehicle must have a combined fuel economy value of at least 18 miles per gallon
  • the manufacturer’s suggested retail price cannot be more than $45,000 (new cite)
KATHY GILL, Technology Policy Analyst
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Copyright 2009 The Moderate Voice
  • Disclaimer: I own a 1992 Ford F150 (4×4, extended cab). However, it has not crossed my mind to trade it in; it’s a perfectly functional, very low-mileage vehicle; and modern trucks, as my article suggests, are not significantly more environmentally friendly than older ones.

  • Claimed by a friend on a mailing list:
    “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.

  • Slamfu

    I think we would be better off with several billion dollars worth of solar panels on homes, or a big wind farm.

  • rudi

    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-clunkers-final-rule.pdf
    Most buyers are trading old truck, suv’s for compacts like the Ford Focus, Dodge Caliber or foreign compact.

    Could find the list, but this Tampa article has this:
    http://www.tampabay.com/news/business/autos/article1024492.ece

    Early 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.

  • Hi, Rudi:

    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)

    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.

    • pacatrue

      I think the “Save” is supposed to refer to gas or the environment or some such. Of course, the word Save is not there for the meaning, but for the first letter and a great acronym.

  • DLS

    Kathy —

    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.

  • DLS

    Also, [sigh] please note that 22 miles per gallon is not a very poor figure, but is close to what in the real world is a standard benchmark for poorer versus better efficiency, 23.5 miles per gallon (10 km ./ liter), in real-world motor vehicles.

  • DLS

    “yes, we are paying people to trade in trucks for trucks”

    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.)

  • Hi Kathy —
    I do think that the government could have made a system that works a little better, but I just wanted to point out a couple of places that I think might make a difference in how you think of this program. Leaving aside the bit about trucks and focusing on cars:

    “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.

  • Hi, DLS:

    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)

  • Hello, Roro80:

    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 think you may have actually missed my point. I ignored trucks, because I don’t know what rule they do need to follow. Maybe there’s none, and you can get the cash for clunkers money trading in a 12mpg truck for an 11mpg truck, in which case I would agree with you. My point was that even modest mileage gains on low mpg cars (or trucks) are very valuable and need to be the first order of business. If you take a semi truck that gets 4mpg and replace it with a truck that gets 5mpg, you are saving 5 gallons of gas per 100 miles driven, which is huge.

  • jimwhenry1408

    Yes, Your vehicle must be less than 25 years old on the trade-in date

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

  • Hi, Roro80 – the point of the column was *trucks.* Not cars.

    • Hi kegill — the math remains the same if you want to use the word “trucks”. It’s still better to have small mpg changes in the worst offending trucks than to have bigger mpg changes in higher mpg trucks or non-trucks.

  • Roro80 – you’re talking theory.I’m talking how the bill has been implemented. It is not worth the interest payments on the DEBT we are taking on for this $3 billion program to met out $3500 to people who are getting a hypothetical 1 MGP increase in their fuel mileage. Also, note that this plan, even with optimistic projections, will do zippo (significantly <1%) to reduce our dependence on petroleum.

    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).

    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)

  • ericrobinson1

    I think it’s insane that the government will allow this to be done with cars that are not really polluting the environment like they would have you believe, but when it comes to a trucking company needing help with upgrading their equipment that is in fine mechanical condition but only averages 5 to 6 miles per gallon per unit, they are not interested in helping out. The EPA is more interested in changing the way the engines in these trucks burn diesel in order to produce less particulates in the exhaust. In doing so, this increases fuel consumption and you get a severe loss of power. If you ask me, the less fuel that a big truck burns, the less pollutants that get released in the atmosphere. Maybe we should think about increasing fuel efficiency and power in these rigs and come up with some sort of program that will allow these companies to upgrade more often in order to be more productive in todays society. WITHOUT TRUCKS, AMERICA STOPS!