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Posted by on Aug 12, 2009 in Economy, Politics | 19 comments

Cash For Clunkers Insanity

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)
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