A cash-for-clunker bill, “stripped down” to $1 billion, has passed the Senate. Automotive News [sub] reports that the new bill will go into effect one month after it is signed by the president and will offer $3,500-$4,500 rebates only through November. The spending cap had been set previously at $4 billion. Sen. Judd Gregg [R-NH] led an attempt to strip the provision from an Iraq funding bill that was voted down along party lines. Meanwhile, the AP bemoans the “flagging clout” of the auto industry. And Autocar points out that total European car sales across all brands were down 4.9 percent compared to May 2008. Yes, the much-vaunted European scrappage schemes helped . . . Hyundai (+25.1 percent), Suzuki (+3 percent), VW (+3 percent) and Fiat (+2 percent). Everyone else . . . not so much.
The sales drought during that month long wait will probably be severe, unless the makers launch a C4C clone toe tag sale. I haven’t seen one of those drag-it-in-here promotions in a long time, but they used to be a common new car dealer pitch.
Bring us any old car and we guarantee a minimum trade-in value of $4500! Of course that inflated trade-in value was made up in the price of the new wheels.
I can see the ads now: “Everyone Pays The Cash for Clunkers PLUS PLUS PLUS Price!”.
I’m waiting for this to turn the F-150 rusting in front of my house into a new car on the cheap. We’ll call this my personal bailout.
This is going to backfire right into congress’ face. Although I imagine that people may use this program to put a Fusion Hybrid in their driveway, I can see Honda, Toyota and Hyundai coming out as the big winners here. Like I said before, Ford is the only domestic that is going to really benefit from this.
The funding was cut to one billion bucks. The president’s signature will figuratively be a starting gun signaling the start of a land run. Get your giveaway while the bonanza lasts!
Look for Focus, Aveo and Corolla ads with fine print that declares “incentives do not apply to vehicle purchases eligible for federal vouchers pursuant to H.R. 2346.” I wonder if we’ll ever again see those $3,500 rebates on Fusions.
Put me in the conflicted camp. I detest the spending that’s leveraged against us for this very “program”, but my 12 y.o. Dodge Subcompact groans a different tune…
So how easy will it be to prove a car gets a certain window of MPG? Or will the rush wipe out the billion before I get my car started?
cnpota, I feel your ambiguity. It’s like when the social security $250 giveaway occurred. I suppose Warren Buffet got one of those. My solution was to give it to more deserving recipients.
Mpg data is on the government’s http://www.fueleconomy.gov website.
Thanks for the direct link.
1.) There is no such thing as an “European” cash4clunker program. Autocar should know that.
2.) Each country in Europe has its own, many have none, some came earlier, some later, some are better, some worse, some work, some don’t.
3.) In Germany, which has a robust and well funded program, May sales rose 40 percent.Biggest winners were VW (+60.2 percent), Opel (+57.1 percent) and Ford (+48.3 percent). By the end of the year, the German new car market is expected to rise 20 to 30%. In 2010, it’ll give all that back. But it sure beats a 20% or so drop.
4.) European country-by-country data with references to the effect of cash4clunkers can be found here.
5.) The US program is an underfunded truck and SUV rescue act. It will do nothing to passenger car sales.
6.) The US program is way too complicated. I always said, the US is the nation of KISS, while Germany is the nation of “why simple if it kan be done komplikated.” I take that back. For this instance.
7.) Ken Elias is right.
It’s like when the social security $250 giveaway occurred. I suppose Warren Buffet got one of those. .
50merc: I got one of those checks and didn’t even live in the country!
Not sure why they decided to call this “cash for clunkers,” since the one thing you decidedly are not given is cash. Just a trade-in credit on some car whose price is already quite probably artificially inflated because of taxpayer money propping the pricetag up beyond where the market would otherwise peg it. Sounds like an example of doublespeak.
Is this just another way to increase the debt of an already over indebted nation? Anyone driving a “clunker” is doing so for a reason, and it’s probably because he/she cannot afford a newer car. So, will these folks be able to qualify for a new car loan? Do we have something similar to the Community Reinvestment Act that will “force” banks to underwrite bad risk car loans? Why not give them subsidized bus tickets, instead? Oh…I forgot…pubic transportation is already heavily subsidized. Hey, it’s only money, guys. We’re doomed, folks…doomed.
This is depressing – a $3500 rebate for the purchase of a vehicle achieving as little as two miles per gallon more than the one traded in. A five MPG increase nets $4500.
This will help clear dealer lots, but it won’t do squat for our real problems:
* It will not significantly reduce our fuel consumption; we will still be burning far too much to accomplish too little.
* It will not fix the bad production mix of the auto companies; it adds demand for guzzlers only slightly less thirsty than the ones they’d replace. But worst of all,
* It will leave us with a brand-new fleet of guzzlers which will not be paid off for years at the exact time when we are facing radical increases in the cost of oil.
It’s almost as if this bill was intended to screw the country.
mpresley:
Oh…I forgot…pubic transportation is already heavily subsidized.
It is? I’m coming back!!!!!!!!
And the think that’s crummy is that for those of us who, all along, have been driving cars that get decent fuel economy, well, we get hosed.
Meanwhile, my neighbors with the Ford Expeditions and 17 mpg minivans, can trade in their tubs and get something else, and I help pay for it.
I wonder how many owners with POS cars (worth zilch, really) are going to step up and spend money…
Well, at least one, me.
I have two vehicles, the 93 Explorer and the gas thrifty 99 Celica (31mpg hiway). The Explorer will be gone after the bill goes into effect. Both front end corner are smashed, the brakes most likely now need massive overhaul and the thing leaks when it rains. Not sure what to do with the Celica. Rock solid reliable, great gas mileage for its age and mileage (172k). But, I can still expect to get about $4500 for it selling it privately.
One main thing that will keep a lot of people with their Suburban Panzers from trading them in is that the $4500 (best case scenario) isn’t close to what most of em still owe on the vehicle.
If they would have left it at a higher MPG (a 2 MPG improvement in SUVs…really?) and/or older than a certain year (maybe 10 years old), it might have gone on to be of some noticeable use to get older cars off of the road and get more efficient vehicles out there. As it is, Joe Public can now trade in their old Explorer for a new one that only gets marginally better economy. Now, if people would trade in that old truck for something like a Civic or Corolla (insert your small car here!), then that would be great…just don’t see it happening like that. We’ll simply trade poor economy for barely better and increase the national debt.
I don’t see dealers necessarily inflating prices to cover this voucher…why would they? They are getting their money, either way. And I don’t see alot of attempts at frauding the system…why would somebody? Just because you got a $4500 credit, you still have to make the rest of the price differential up in monthly payments or cash out of your own pocket.
I do see it helping a select few that are considering smaller cars as replacements for their old, worn-out trucks/SUVs that otherwise now have little value to them (and are financially capable of actually buying a new car). Me? I’ll stick to well-maintained three or four year old used vehicles, thank you…
Finally found something good about this program.
Odds are many inner city people that own the clunkers might actually insure them for a year to qualify for the giveaway.
Do the other nations Cash for Clunkers programs allow for the purchase of foreign made vehicles or is the Obamanation the only one dumb enough to spend a billion to prop up another countrys’ auto industry?
I’m mulling this over, as a potential ideal target for this incentive. But several considerations, so far, serve to blunt the effectiveness for my budget.
Take my example. My 1995 BMW 540i (6 speed) has 190,000+ on the dial. Rusty doors and bad paint. Interior is fair at best. Despite its being a mechanical rock (in the good sense — everything works, and well), I’d expect to get far less for my car on the open market than the possible $4500 through this program.
But consider:
* no doubt, I’d be taxed on this $4500 as income
* I’d have to buy a new car (I assume), not certified used, which would expose me to interest and depreciation costs
* My city’s property taxes would rise on this car
* My insurance would climb, though perhaps moderately
* Though a new car shouldn’t be costly to maintain, on the other hand I do my own work presently so only am out parts costs
I think given the costs associated with both the cash incentive and the new car, much of the value of the incentive is lost. After factoring in interest, taxes and depreciation, I might still do better financially if I were simply to sell my car.
This assumes my decade-long practice of buying used cars for cash would continue. It might brighten the picture if I planned to retire from shadetree repairs and seek out a stable monthly payment and a warrantee.
I have much mulling still to do. I wouldn’t mind getting out of this particular car for the maximum cash possible, but I don’t relish the idea of a five year servitude. A lower gas bill is attractive, but a look at what’s out there in my new-car budget is depressing. Right now, I admit I’m 50/50 on the idea for me personally.
That, of course, leaves out any political opinions I have about the measure.
5.) The US program is an underfunded truck and SUV rescue act. It will do nothing to passenger car sales.
Well this is a nice how-do-you-do(?) from the United States Gov’t. While I’m not exactly strapped for cash and I have solid credit, knowing that I’m virtually excluded from even making a lateral move, subcompact-to-sub, will be nearly impossible. I guess I’ll have to spit in the collective Obama-Feinstein-Green Warrior of the Earth United eye.
I don’t qualify because my car already gets good gas mileage. My dad swears by the car buying process here: http://excarsalesman.typepad.com/. It is kind of similar.
I haven’t tried it yet, but I might because it looks good.
I have a feeling dealers are going to automatically increase prices because of the increased demand (artificial) for lower MPG cars. So the thousands of savings from this bill for consumers is not entirely accurate. The demand will increase prices and you’ll get a voucher from increased prices. I’m certain some markets you’ll come out even as if they never offered this voucher. It is poorly written legislation.
I wish I had purchased a clunker for $50 2-3 months ago and waited, prior to the scheduled expiration of the program, to claim the voucher. You need to be the registered owner for a year, but because the program doesn’t last a year, you can’t buy a junker today and have 12 months of ownership.
To some earlier posters w/misconceptions about the plan:
I don’t believe this is taxable income to the purchaser.
You have to buy a NEW car or truck
The car traded in has to be junked.
Oh well, some of you caught a windfall, but I don’t think it’s going to make much difference to dealers.