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Cash for Clunker signs or ones just like them are popping up all over now. A few folks I’ve met seem to have taken to it and report back that it does indeed work as advertised. We’ve even heard of folks trading in their work truck for a new, vastly more efficient work truck and being delighted they can afford it now.

We’re curious as to how many working folks are doing this. It does seem like a good deal, and trading in a rather thirsty old truck for a newer truck that gets over 20 mpg, is safer, and has more power doesn’t sound like a huge downside to us.

You do wind up picking up a new car note and insurance will go up as well due to the minty freshness of your purchase, but if you were thinking about making a run at a new rig anyway it doesn’t seem that bad.

What do you think? Is this a good way to go, or just another way to plug a leaky dam with chewing gum? Let us know in comments.

Car Allowance Rebate System [cars.gov]

 

38 Responses to Hot or Not? The New Deal — For Cars

  1. Bill says:

    The twice-failed program ends in 6 hours so there’s not much point in talking about it now. Having said that, no, I had no plans to take advantage of it. My two 1995 pickups were worth too much in trade-in to qualify for the rebate so this clearly had nothing to do with getting low-fuel-efficiency vehicles off the road.

  2. Jim German says:

    Like Bill said, the program dies in a few hours, so its rather moot. But it had everything to do with pumping up the automakers, and very little to do with making cars use less gas. I guess since we all own an automaker now its not that terrible an idea, but I’m generally against any sort of bailout/stimulus/give my taxes away to other people plans.

  3. Jim German says:

    Ohh and if you’re gonna go for the shameless flame-bait posts, could they at least be more tool related?

  4. Kyle says:

    I took advantage of it. Replaced my truck with a Civic. But this would have been a better article oh, say a month ago.

  5. Shopmonger says:

    HOT
    Does a few good things for our country right now:

    1. Gets gas gusslers off the road
    2. stimulates some auto growth and sales
    3. allows some people with lower incomes and bad old cars to get a little boost
    4. Allows more people to have jobs, (I have 2 friends who are now full time helping run this program through its course)

    ShopMonger

  6. Harry says:

    Cash for clunkers is like trying to put a band aid on a sucking chest wound. Its effects will be minimum at best. I’m worried about a cash for clunkers backlash. With the program’s end, dealer sales may plummet again. I also worry that many of tthe people that took advantage of this program may not be able to afford a new car. Can we say car loan crisis?
    There’s still a program going on where you can get a tax credit for purchasing a new car that runs until the end of the year but, it’s not getting as much media hype. I don’t think any of the stimulus programs are affecting tools sales, use, or development so, lets get back to tools.

  7. russ says:

    I was at some dealers this weekend looking for a car for my wife. Unfortunately the real clunker did not qualify…I am speaking of my wife’s car. Of 4 dealers, two of them had stopped it already and another was ending on Saturday. Not one has yet to receive a penny even though they were told the process would only take 10 days.

    Basically it isn’t working because most all of the dealers haven’t received a dime yet. Until they get their money which maybe months away we won’t know. The dealers I spoke with sold over 100 cars through the government program. That’s alot of money. Delays like this is normal when the government is involved – get ready for healthcare.

    I also would like to know which cars, make, model, and year were turned in and what vehicles were bought. Then we really can take a look at the money spent [3 billion plus] compared to increased fuel mileage. And then ask was it worth it.

  8. @Bill and Jim German:

    The post may be late, but I think there is value in still talking about it now. I have a feeling that this isn’t the last program that we see like this. Remember what they say about failing to learn history…

    I think it’s a NOT.

    1) It’s an environmental fail, sure you get some incremental increase in gas mileage, but is a 4MPG improvement going to offset the environmental costs of building a new car to replace it. And remember the cars that are taken out of circulation have to be destroyed. It would have been much less wasteful to allow them to be sold for parts. Instead they have to be recycled, or worse find their way to a landfill.

    2) The cars that are getting traded in are cars that low income people could have afforded.

    3) I don’t have a source right now, but I was reading that dealers were jacking up their prices to compensate for the program, so in many cases you we’re getting anything more for your money. Not to say that you couldn’t get a good deal if you knew what you were doing.

  9. Bemis says:

    …aside from what most of the others have said–the program’s second wind runs out in a few hours–this has been a joke when it comes to helping the environment.

    What it does is give a small group of people incentive to go out and buy a new vehicle.

    My guess is that most owners of a vehicle worth less then $4500 probably either enjoy and take pride in owning an older car, or shouldn’t be saddled with a new car payment.

    If they cared about the environment then this would have been extended, in some form, to include more fuel efficient used cars, and it would also have been more focused at down sizing vehicles in general, so there would be more incentive to move from a full size SUV to a sedan… instead it had wishy washy requirements like a 2MPG improvement for certain classes of vehicles.

  10. Josh says:

    I second that Benjamen!! No one thinks about the entire supply chain these days. How much polution was created in unregulated third world countries making parts for all these new cars. The best way for any of us to recycle is to repair and maintain older cars. Why do we feel we have to consume so damn much. More consumption is never going to be a long term answer.

  11. Zathrus says:

    I’m wondering how a program that does 3x the volume in 1/3 the expected time is considered “twice failed”.

    I generally agree that it’s not really an environmentally sound program, but I know a few people who traded in SUVs or pickups to buy a Toyota Corolla or equivalent.

    My guess is that most owners of a vehicle worth less then $4500 probably either enjoy and take pride in owning an older car, or shouldn’t be saddled with a new car payment.

    Huh?

    I have a 2001 Nissan Maxima SE. Trade in value is around $3200; private party is $4780. I’m not exactly taking pride in owning “an older car”, and I could certainly afford a new one, but it runs just fine and I have no need for a new car right now.

    As for extending “in some form” for more fuel efficient cars — the $7500 rebate on hybrids remains in effect, and will for some time.

    Certainly seems like this program has been HOT. And until this weekend every car dealer out there was praising its existence for giving their businesses a kick in the pants.

  12. Bob says:

    It’s communistic, socialistic, marxistic, and all the clunkers are being sent to Obama’s relatives in Kenya.

    There I feel better now. 🙂

  13. Cherokee Lady says:

    I was very, very sad when I saw the list of most popular clunkers. #4 on the list was the venerable plain-ol’ cherokee. Since the “clunkers” had to be roadworthy, and not a rusting hulk pulled from a field, that means that thousands of potential donor-mobiles for my favorite (and discontinued) vehicle were destroyed.

    I have my reasons for liking that particular model that isn’t available in the newer “replacements.” Since I’ll never buy a vehicle with an OnStar tracking and privacy-invading gizmo, I could care less if GM failed. They brought too little to late to the table: concentrating on the profit-raking large trucks. They pooped out the Hummer: they should just wallow in the stinking mess.

    I love the old chevys, but I’m all for a required fleet average of >30 mpg that averages everything. They can still sell 6mpg monsters, just a LOT fewer of them, which will put them back to where they should be – in the hands of those that appreciate the vehicle, not being piloted down overcrowded roads by a cellphone yakking, self-obsessed jerk who thinks they own the road. Sorry, your “owned” potion as a tax-payer is a small section of interstate in West Duluth. Please go THERE and own it.

  14. Brian Dolge says:

    Aside from Kyle (who says hot) Russ who at least went to a dealer(and says not), most folks here seem to be running on hearsay, aimless rage, and anti -government hysteria. So here is some data-

    It seems that the eco/carbon argument for cash for clunkers is weak, not because there isn’t a benefit, but because the gain that result is expensive and long term. Here’s a good summery: http://www.slate.com/id/2224306/. (yes they account for the whole supply chain)

    The benefit to the buyer is real and immediate of course as is the benefit to the economy when people buy industrial products. The only trickle down economics that work is when consumers buy stuff and that trickles down into jobs , which produce more consumers. And rich people are relatively lousy consumers, Again one can argue the efficiencies here, but I haven’t heard anyone come up with a better way to increase consumer spending (and don’t say tax cuts, surveys show in this kind of environment people pay debt or just sit on the money while waiting for better times.)

    Lastly my friend who used the program says way hot and she traded in a less than 25mpg SUV for a 30+ mpg compact. For what it’s woth

  15. Mike Yancey says:

    Didn’t work in our case.

    Our oldest car was a Ford Ranger – stick shift – gets EPA 19 MPG – one (1) mpg too much for the ‘clunker’ program.

    They one ‘they’ wanted was our 1997 Explorer, still in great running order and looking pretty good.

    But had we traded the Explorer, we’d be stuck with an older truck my wife can’t drive and would’ve destroyed a perfectly good vehicle.

    Personally, I think it’s a huge waste of capital – both in taxpayer dollars and in the working capital that was destroyed – hopefully some will be parted out, but the engines were disabled as part of the program.

    Mike Y.
    Dallas, Texas

  16. Old Coot says:

    And those same folks want to take over our health care system. Next program: Cash for geezers…trade in your cranky old grandpa for credit towards?

  17. Initially I read that the engine and the drive-train had to be destroyed, which accounts for 60% of the salvageable material, but evidently they changed the plan and it is only the engine which must be destroyed which accounts for 30% of the salvageable material.

    Here’s an article about the disposal:
    http://www.time.com/time/business/article/0,8599,1914367,00.html

    Again IMO: Seeing the huge demand for the original plan, I still think it’s really stupid that when they extended the plan they didn’t increase the efficiency requirements. They had the chance to make a much larger environmental difference.

    ————-

    Here’s a few articles that back up Russ:
    http://money.cnn.com/2009/08/20/news/companies/clunkers_sales/index.htm
    http://www.consumeraffairs.com/news04/2009/08/clunkers_cash19.html

  18. rjerryc says:

    As has been said – it’s over and done. The biggest downside I saw was the reality that many people were/are driving junkers because they are paid off and they can skate with minimum insurance. It is what they can afford. Simply stated, the majority of the buyers will get repo’ed in a year or less because they couldn’t afford the new car anyway. The $4,500 gave them the edge of a so-called down payment so they could qualify. Same deal as home buyers faced getting bigger loans than they could afford – result? Foreclosures across the country. The repo man and the used car sales folks will reap benefits later.

  19. rob says:

    I do believe the reduce reuse and recycle policy should be applied here as well
    if your older car runs well does its job properly how many years of saving 2-6 mpg is it going to take to pay off your new car

    the extra cost of insurance will out way your saving in gas almost every time
    at least here where the insurance is monopolized and crooked

    not to mention mow many other cars could have been saved with he parts from thoose that were scraped if the engine was disabled you may have made even more CO2 to make new engine blocks that could have been rebuilt and used again

    I am yet to see a engine cost more to rebuild than to replace with new/rebuilt sometimes it is hard to buy a good used engine for the cost of the parts to rebuild so what takes more energy money and raw material some rings ,bearings and seals vs a whole block

  20. Rick says:

    How in Hades did I end here? I clicked on ToolMonger and ended up on Autoblog.

  21. JB says:

    Not! This is just another poorly thought out short cut to stimulate the American economy while side stepping less easily addressed issues. Additionally if the average person maintained their vehicle correctly, and drove it in a sensible manor they would find they had a fairly fuel efficient vehicle.

  22. B. Foo says:

    Like all the other ways the government wastes our stolen tax money, this is no different. My friend sent me this:

    The “Cash for Clunkers” program has been a “great success”, at least according to the government, and the auto industry. Within days of its kickoff, all $1 billion allocated to the program has been used up by Americans who have eagerly lined up to trade their clunkers for new vehicles.

    Some refreshingly honest reporting has come from Edmunds.com, a car buying site that is telling the truth, in spite of benefiting from an increase in business and site traffic, due to the program. According to Edmunds, about 200,000 old low mileage cars would normally be traded in, every 3 months, in exchange for more efficient higher mileage cars, without this program.

    The highest rebate is $4,500, and the lowest is $3,500. If everyone qualified for $4,500 per vehicle, about 222,000 vehicles would have just taken advantage of the government’s money. At $3,500, 286,000 vehicles will have been sold.

    I assume that, given all the raving, the government will eventually get around to assigning more money. It will take at least 2 or 3 months for the legislation to work its way through Congress. Meanwhile, if all buyers have qualified for the higher $4,500 rebate, the “cash for clunkers” program will mean a marginal increase in car sales of 22,000 this quarter. $1 billion divided by 22,000 means a net cost to the government of $45,354 per car.

    If all buyers only qualify for the $3,500 rebate, it means a marginal increase in sales of about 86,000, or a net cost to the taxpayers of $11,628 per vehicle. In all likelihood, however, there will probably be a mix of vehicles qualifying for various rebates between $3,500 and $4,500. Based upon that assumption, Edmunds.com estimates that the average cost to the taxpayer will be about $20,000 per vehicle.

    Even most of the marginally extra sales really represent people who were going to buy a new car eventually anyway. They are just buying a bit sooner than they expected. Old clunkers don’t last forever, and they are almost all eventually replaced. The government is shifting tomorrow’s demand to today, stealing from tomorrow to pay for today, but at great cost to the taxpayer.

    The “cash for clunkers” program is yet another boondoogle – an expensive waste of precious taxpayer dollars. Government spending should be reined in, in light of the multi-trillion dollar unsustainable deficits that this nation now faces. However, if we must increase government spending, the money would be better spent on infrastructure and education improvements that might help bring jobs back to America, and encourage long term growth, rather than cosmetic improvements to the short term earnings of makers of high mileage automobiles, many of which are foreign companies.

    This government is, unfortunately, a reflection of the current state of economic immaturity that prevails in America. The vast majority of people, including most people in Congress, do not understand the forces that drive the real economy, and see only the short term view. That is how they get manipulated into allowing the Federal Reserve to behave like a slush fund for big banks, passing programs like TARP into law, and enacting programs like “cash for clunkers” which all abuse the taxpayers.

  23. Chevy_Man says:

    Artifically stimulating the economy will not drive the correct behavior.
    So what happens after this Cash for Clunker promotion is done? People might just buy ONLY when the government is providing rebates.
    Will we need another Cars program in another two years?

    I don’t like the fact that dealers are required to drain the engine oil then replace it with some kind of seizing compound oil and the engine runs at 2000 RPM until it locks up!

    All this does is makes those engine blocks useless to be rebuilt and makes the parts more scarce and expensive. So much for helping out the “Little Man”.

    Bureaucrats apparently don’t understand that engines can be rebuilt to run like new thus polluting less. Ok the mpgs may be an issue, but not everyone can or wants to drive a subcompact. Another thought: what pollution is created / energy used to produce a new fuel-efficient vehicle?
    How about promoting proper vehicle maintainance?

    This CARS program has bolstered foreign car sales more than domestic.
    I thought the whole idea was to help US automakers?
    Will we need another program to help those who can’t make their payments on their new cars bought from Cash for Clunkers?

  24. KMR says:

    I saw two mentions in the above comments that it takes far more energy and results in far more pollution to produce a new vehicle than it does to keep an old one running (all true), and that flies in the face of the goals of the Clunkers program.

    However, think back to January and February when we all saw those new clips of THOUSANDS of new vehicles sitting mothballed at ports and depots because dealers were not buying them for inventory because the dealers didn’t have the sales to justify keeping inventory levels up.

    You can’t just let those thousands and thousands of new 2009 models sit around… they’re not going to turn into 2010 models. Those surplus 2009 models have to be sold. All of the auto makers have cut production over the past months, and no where did I read they were increasing car production due to the clunkers programs. That means that those mothballed surplus vehicles that have been sitting for months are finding new homes… and that is a good thing. They’re already been produced, so the environmental penalty has already been paid for their production… they just need to get into a new home.

    August is the start of the 2010 model year. If those thousands and thousands of surplus 2009 models had stuck around any longer, their value would have further decreased. The Clunkers program was well timed, has reduced the already-produced vehicle surplus, and eliminated a large number of inefficient vehicles from use. From that point of view, this program worked perfectly and lasted just the right duration so that it doesn’t overlap much into the 2010 model sales.

    I do disagree with running sodium-silicate through the engines. It would be much faster / cheaper to punch a hole through the side of the block or remove the spark plugs and fill the cylinders with epoxy. The engines could then be stripped later and their major components (rods, crank, cams) would still be usable… while the overall engine unit wouldn’t be. The sodium silicate solution destroys everything through very harsh abrasive wear and the resulting friction and heat from not having an appropriate lubricating medium (oil) in circulation.

  25. Zathrus says:

    @JB:

    Uh, no. I don’t care how well you maintain your vehicle, you’re not going to get significantly more than the EPA estimates. That 12 mpg SUV isn’t going to magically get 30 mpg no matter what you do.

    @B. Foo:

    While true that it may have simply shifted the trade-ins from the future to the now, there is an economic advantage to doing that — the industry needs the boost NOW, not in the future. That is a tangible economic benefit, as any economist would agree. As for whether or not the cars traded in were simply accelerated trade-ins from future activity — that remains to be seen.

    I thought the whole idea was to help US automakers?

    You thought wrong.

    Besides, many “foreign” cars are now made in the US, with US labor. By contrast, many “domestic” cars are made outside of the US. Of course, this has been true for two decades now, and people still don’t understand it.

    The reason that “foreign” makes sold better is because the Japanese model lines have long been better about fuel efficiency, and part of this program was to promote fuel efficiency. The Big Three have been ignoring fuel efficiency for decades.

  26. Kif says:

    @ chevy_man. When Obama spoke about maintenance and tire pressure during
    the campaign, a bunch of morons responded with guffaws. Funny how that works.

    I’d for one would like to see less political flamebait on toolmonger. I almost quit reading when the blog was hijacked for a UAW bashing session. The rule for the summer has been “it’s not the quality of what you add to the discussion, it’s how loud and obnoxiously you do it”. That comment posted by some coward hiding as “bob” was assinine, and nobody called him on it. I suppose most commenting on this post are like minded. Are we going to start talking about tools? Or just listen to a bunch of tools talking?

  27. @kif:

    There are many sources that have done testing and claim that under-inflated tires don’t affect gas mileage appreciably. One such source is Edmunds:

    http://www.edmunds.com/advice/fueleconomy/articles/106842/article.html

    Not that there aren’t other good reasons to keep your tires inflated to the correct PSI like causing less wear and preventing blowouts.

  28. kif says:

    @Benjamen

    I brought up tire inflation because of chevy_man’s remark about maintenance, an his assertion that nobody talks about that. And I think that what Obama was saying was very valid about taking small and significant steps. I think that most of the participation in this post has to do with politics and Obama.

    It certainly cant be because of a $3 billion program, because only the very ill informed would think that this program is very expensive or unique. Anyone with any awareness knows that the government has used incentives for some time; incentives directed towards businesses, other governments and individuals to take, at least what is perceived to be, a beneficial course of action. For example, the Bush administration sent $12 billion dollars in CASH to Iraq do distribute to locals as a disincentive to fighting. Anyone who’s bought a home with an FHA home, paid for an education with financial aid has taken part in a tax financed government incentive program. Rural electrification is another example.

    My question to you, Benjamen, and other regulars at this blog is are we going to stay political or get back to tools. Frankly, from what I’ve seen on this post, Toolmonger sucks as a political forum. Any impartial, and knowledgeable, party would attest to the fact the quality of political discussion is low. Furthermore, I wish that Sean had anticipated what would happen when he brought some of the tired back and forth into the blog.

    I come to Toolmonger to get away from the outrageous crap I hear in the news, is it still worth it?

  29. Patrick says:

    Why not bring it up? It goes to the heart of some toolmongers – if you’re guy with a truck and a jobsite, and you have one but the other’s getting on its years, would the deal be viable? Or is the point to save the planet, your personal wallet, or the economy. Did it work? I think for many of us toolmongers, we make these decisions every day with the tools and materials we buy.

    I for one took the deal. I downsized from a 1992 F150 Reg. Cab to a Tacoma w/ a DoubleCab – I needed a seat for the new baby. I intend to sell that particular truck to my son in sixteen years.

    But I haven’t seen idiotic discussion – some strongly colored discussion, red, blue and green, but nothing close to what happens on talk radio everyday. I don’t mind the politics once and while and Sean, Ben & the gang haven’t gone beyond that yet.

    HOT on the deal, for someone in my situation. Unsure elsewhere.

  30. russ says:

    Every month or so this blog gets a topic that get lots of responses. Maybe they should bring these topics back as most discussed over the year, kinda of like the best of the week.

    @kif – Politics not only affects our lives but our tools. When politicians make a law, subsidy, rebate, etc. about our tools or things we use our tools for there should be nothing wrong with discussing it. We don’t need to say it’s Bush’s fault. We should look at it as it is and discuss the facts, which in most cases our politicians do not. As we have been finding out lately our politicians don’t even read the bills they vote on. If it is a boondoggle then it is, no matter who is in office.

    I think Sean antipated what would come out of this. It doesn’t take a brain surgeon to figure that out. No offense Sean.

  31. browndog77 says:

    In my opinion, the cfc program was a thinly veiled way to funnel some more money to the unions, in this case, the UAW. Think about the other economic stimulus package funded projects we have currently. Roads, bridges & schools!
    Good things to put money into, but who supplies the workers for 99% of those jobs? How about Uncle Sam making some funds available (at low or no interest) to middle class homeowners for renovation projects. That would spread he wealth a little more evenly.
    My daughter works for a Dodge dealership, and they loved the cfc thing at first. Sold a bunch of cars, but now they are unsure if they will be reimbursed at the advertised rate!

  32. Zathrus says:

    Good things to put money into, but who supplies the workers for 99% of those jobs?

    Really? I can pretty well assure you that around here it’s not unionized labor. Oh, and all but one domestic plant for Toyota/Honda/Nissan is run by non-unionized labor; I believe the same is true for BMW/Audi/etc but don’t know for sure.

    As for the “middle class homeowner” — there’s already a $1500 tax credit for any energy related home improvements (materials only; not labor — if anything that spurs the DIY market) for 2009 and 2010. That’s been on the books for far longer than this program.

    they are unsure if they will be reimbursed at the advertised rate!

    Based on what? The fact that it takes time to do the paperwork, submit it, and receive the rebate? Or did they screw up and offer it to a bunch of invalid cars or not get the paperwork they knew they needed to offer the deal?

    If they’re so concerned about it, then Chrysler was offering to front the money to dealers, so the dealers wouldn’t have to worry about it. GM was as well. I heard some reports of Honda doing so.

  33. Eric says:

    Keeps people working, prevents deflation, improves the environment (most of a car’s energy consumption is in fuel, not manufacture), and forces republicans to go through some pretty torturous logic to call it a “failure”. I’d say hot.

  34. B. Foo says:

    How does it keep people working? My father in law owns a Chevy dealership and aside from selling a few extra cars it has done nothing to help him or the people he employs. That place is just about closed.

  35. Joe says:

    I’ve also heard recently that the $4500 credit is taxable. Maybe a bad surprise come tax time.

  36. browndog77 says:

    The $1,500.00 tax credit Zathrus mentions is the max allowable #, derived by using up to 30% of the cost of qualified materials/systems. It is only available in ’09 & ’10 at this time. There are lots of variables involved in determining who & what is elegible. As far as who is doing the stimulus funded infrastructure work, it will always be prevailing wage controlled, & around here that means union labor, almost exclusively!

  37. quickredfox says:

    we traded in a 1989 GMC K1500 for a Subaru Outback. All of the dealers we talked with thought the paperwork was confusing and onerous but admitted that the clunkers milkshake brought the boys to the yard. That we replaced our used truck w/ a 2002 Tundra is a closely guarded secret. My understanding is that the $4500 is basically a ‘trade in’ so it’s not counted as income. Our truck was trashed and barely made it to the lot. I removed the tailgate for use in the garage somehow as an erstwhile horizontal space for beer consumption or reminiscing about how Big Green used to demolish my wallet.

  38. Joe says:

    Sorry, I was mislead. Probably would have helped if I read the actual faq on the .gov web page. http://www.cars.gov/faq

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