In Hindsight, Maybe Cash For Clunkers Wasn't Great Idea
Now that the National Highway Traffic Safety Administration has come up for air after a mad dash to reimburse dealers for cash for clunkers transactions completed in July and August, the agency has started to release (some) of the real data. And it looks like the glowing sound bytes of last month are giving way to some much less encouraging realities.
Let’s look at how the clunkers program shakes out now that the numbers are in.
Environment:
In August, shortly after Congress pushed through an additional $2 billion for the clunkers program in a frenzy before leaving town for summer recess, Christopher Knittel at the University of California-Davis estimated that the clunkers program was an expensive way to reduce greenhouse gas emissions. The best case estimate for the cost per ton of carbon dioxide saved through the program was $237.
Replacing guzzlers with fuel efficient new cars:
As Public Citizen and other auto analysis suspected, the clunkers program was structured in such a way that would not necessarily encourage consumers to trade in a Ford Explorer for a Ford Focus. And while the initial lists of vehicle released by the Department of Transportation suggested that consumers were, in fact, make just these kinds of trades, the full list of vehicles, released on September 21, exposes the reality that the program sold a lot of light trucks, too. The revised top 30 purchased vehicles list includes the Chevy Silverado (number 8 ) and the Ford F-150 (number 10). Dropped from the top ten were the Toyota Prius (dropped to number 14) and the Honda Fit – practically the poster child for a high-selling fuel efficient car (dropped to number 17).
Enticing consumers to buy cars:
On September 18, Cars.com released the results of a survey of people who purchased a car in the past three months or plan to purchase a new car in the next six months, which sought to probe whether the clunkers program has encouraged new vehicle sales. The Cars.com survey estimates 30 percent of buyers who participated in the clunkers program weren’t planning to buy a car. We suspect that this is probably an overestimate. The stimulus value of the program rests on the ability to spur unintended sales. To date, NHTSA has not released any estimate of how many new sales the program generated, or if purchasers merely moved up an intended car purchase to capture the subsidy.
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When did this ever seem like a good idea? Let's run down the high points:
First, in an ailing economy where you can't be certain you'll have a job tomorrow, let's encourage people to go out and borrow $30,000 for a new car.
Second, let's reward people for being irresponsible. Because if you already have a fuel efficient car, you don't qualify. But if you have 12,000lbs SUV that gets 5 gallons per mile, you can come trade that sucker in and get government money for it. In the words of the Guinness ads , "Brilliant"
Third, let's tell everybody how much oil this is gonna save. Well, not how much, just that it will save a bunch. What do we mean by a bunch? Oh, let's not get all caught up in figures and stats. Huh? You insist? Ok, it's about 5 hours of our yearly consumption.
Fourth, let's get the government involved in subsidizing cars . Forget the fact that this has absolutely zero to do with anything the government should be involved in. Also, forget the fact that this will only create a temporary surge in car buying as folks who may have decided to wait until next year simply move up an already looming purchase. Forget all that.
Seriously, when did this ever seem like a good idea? Quick poll : How many of you under the poverty line out there are now enjoying your new " cash for clunkers " car? A few, maybe, but not many.
I (maybe a first for LagerHead) completely agree.
But the real tragedy is that this stunt got more attention than just about anything else since the election ended.
'Pan and Circ' is all it takes anymore. Who needs mind control drugs ?