Cashing in on Clunkers
Before the ink had dried on my draft for this article, the Obama administration suddenly pulled the plug on the government’s scheme to dole out up to $4,500 for trade-ins.
The problem, it seems, was that the federal program was too successful, churning through the $1 billion in less than a week instead of the estimated four months.
Then, before the ink dried on my second draft, Congress not only reinstated the program, but our thoughtful legislators upped the ante by another $2 billion.
We’re spending all this hard-earned tax money to jump-start the auto industry with a program that will end up having the same net effect as what GM’s “Keep America Rolling” campaign had after September 11, 2001. That was before we decided that only the government could solve problems in the free market. Back then, good old advertising and 0 percent interest revived the automobile industry, not only for GM but for every automaker.
(By the way, the “cash for clunkers” legislation is contained in 105 pages. Consider that number, knowing that the health care bill is ten times longer.)
Ready to call your local congressperson and ask just what kind of medication they’re taking in D.C.? Hold off — you might also consider cashing in on the windfall. After all, it’s your money.
A likely trade-in candidate gets less than 18 MPG (according to the revised EPA guidelines), is less than 25-years-old at time of trade (1984 and later), moves forward under its own power, has been titled in your name for at least a year, and is insured. If you’re not sure your candidate meets all these requirements, our government has thoughtfully provided a keen website with all the tools you might need to vet your clunker.
But even if the clunker in question qualifies, you want to be sure that it’s not worth more in normal trade than according to the program’s largesse.
Suppose you’ve got a well worn 2000 Jeep Cherokee Sport with 108,000 miles on the odometer. The EPA says it gets a combined fuel economy of 17 MPG, and you’ve no reason to doubt that number. The Blue Book and NADA guides suggest it’s worth no more than $3,000, and you’ve confirmed that with your own research.
Since you need some space and utility, how about a new VW Jetta SportWagon TDI diesel? It’s EPA combined 33 MPG is nearly double your Jeep’s mileage, VW’s new and clean diesel has plenty of torque for pulling power, its $25,670 MSRP is quite reasonable, and there may be room for negotiation.
On the other hand, if you own a 1984 Lamborghini Countach with an EPA of 11 MPG combined, it may qualify for the $4,500 of government money but have a much higher market value. Since there’s a nice ’84 Countach currently on sale for $119,888 in the Seattle area, let’s assume that even a Lambo parts car that starts and runs under its own power is worth more than Uncle Sam will part with.
The rules of the program seem to be bordering on capricious. Although the EPA had published fuel economy numbers on its official website for most vehicles going back to 1984, the agency decided to review those ratings and make them accurate to the fourth decimal point. That slight of hand resulted in 78 models that were eligible a week ago, and quite a few traded in anticipation of the program, to be reclassified as non-qualifiers. Dealers and consumers who were victims are up in arms. On the other hand, 86 models that were formerly ineligible now qualify. You can’t make this stuff up.
Thank you for clearing that up,
I had no idea what a clunker was.
I thought a clunker was a union made, paint peeled 1994 Chrysler Dodge Grand Caravan that has had 2 transmissions replaced and the 120,000 mile motor rumbles like a salt mine.
but the Bambie government says NO-
because it gets a combined 19 miles to the gallon and it has to be 18 mpg or less.
If this union made piece of junk went fast enough to get 19 miles to the gallon
The third transmission would fall out and All the frigging paint would fall/peel off.
Anyway I need to calm down and find a family member that has a clunker I can trade in and get some of you rich White Boys monies.
It would be better to take my sharp pencil and find an 8,000 dollar house and a 4,500 dollar government car-
Then I could live on food stamps and 400 dollar a month unemployment checks for many-
many- more months.
Doesn’t it bother anyone here that if I have a “clunker” that is worth about $1,000 to $2,000 (nobody ever gets the blue book prices), and if the government is giving me $4,500 for that car, the government is losing $2,500 or more on that deal? Remember gang, this is YOUR money we’re talking about. The Feds are not just pulling this money out of nowhere, it’s coming from YOUR taxes. Are all of you comfortable losing $2,500 or more on these deals? And worse, if these same people trading in these clunkers end up buying Japanese or German cars, how does that exactly help the American car industry? And these same characters want to run health care? We are doomed, you know that, don’t you?
And just think, even if your clunker doesn’t qualify, the government just guaranteed that the value of your old car went up possibly by thousands of dollars on the used car market! The qualified clunkers all go into the shredder, engines, parts everything. That means the used car pool has just diminished by a significant percentage. The working poor who can’t buy a new car, no matter what value the clunker they have now is worth, will be looking for used cars in a market where the average value has just gone up by thousands of dollars. What a program!
I am normally against government subsidies but this one I like. The Obama adminstration, like all Democrats takes money from taxpayers and gives it to taxconsumers. However, in this economy if you can afford to by a new car and take on an extra payment you are probably in tax paying part of the population. You might as well get some of your money back
I have no idea the point of your post.
As near as I can figure since Obama did it, it is a bad thing.
And even though it’s a bad program, it’s worse that they reviewed the mileage standards and made less clunkers eligible.
What a waste – from the cars.gov website:
What happens to the vehicle I trade in?
The CARS Act requires that the trade-in vehicle be crushed or shredded so that it will not be resold for use in the United States or elsewhere as an automobile. The entity crushing or shredding the vehicles in this manner will be allowed to sell some parts of the vehicle prior to crushing or shredding it, but these parts cannot include the engine or the drive train.
I hope we will see lots of media reports and pictures of drivable cars being “crushed or shredded”. What a powerful depiction of government waste.
The last numbers I saw for this program (yesterday) was something like 23000 clunkers traded in. That’s just a little over $100 million. If those numbers are correct, where did the other $900 million go?
Maybe I misread. Somebody got an update on the clunker trade-in count?
In any case, the clunker deal is making my 10 year old 31 mpg Neon worth more, ain’t it? The suckers that voted for Obama ’cause they thought they were gonna fet free money from the gub’mint (via the standard liberal tax extortion of me and my productive friends) are getting screwed just as predicted and they are not going to be in the market for a new GM car. Chew up all the used cars in this program, and mine becomes more valuable in resale every day. Anyone else remember pricing signals?
There will be some pretty decent cars turned in this “program,” all destined for destruction in a crusher. Does anyone doubt that there are already crooks diverting some of these cars back into circulation? It is the perfect opportunity for a guy like Kwamee Kilpatrick, Conyers wife or any Chicago Alderman. The IG charged with keeping the program honest already knows what will happen to him should he discover a problem involving one of the Kenyan’s friends.
The dealers count any resale of a clunker as gravy; the local politician sees providing covering paperwork, i.e., a corrected title, as a non-violent profit opportunity; and the federal guys see “clerical errors” in failing to enter accurate date as a zero risk money maker. This program has enough potential for corruption to make a democrat congress happy!
Actually, LibertyShip, the goverment (ie taxpayers) are losing the full $4500. The bill requires that clunkers be destroyed (engine disabled) and scrapped. So we’re destroying perfectly good running vehicles.
The reality is that this bill probably does little for the environment or the car industry long-term. Wired had an article last year arguing that you wanted to help the environment, you were better off keeping an SUV than trading it in for a hybrid, because manufacturing a car uses a huge amount of resources and has a huge environmental impact. As far as car sales, I suspect that we are just borrowing sales from the future.
The other thing is on a few of the message boards I read, people have discussed the cars they are trading in, and many of them are barely running vehicles with major mechanical problems – vehicles that would have been taken off the road/scrapped anyway – so we are paying people to do something they would have done anyway.
There are a ton of problems with this “program”. What happens to the dealers, after the government changes the rules mid-game (like they did to the banks) and leave the dealers hanging with a quarter million $$$ in junk inventory they can’t sell. Not to worry, just a few more small businesses failing, but they aren’t big enough to cause a problem.
And before you log into cars.gov (if it’s not too late), you better watch this:
http://www.youtube.com/watch?v=mqfuZ7hiap0
And some people thought the FISA program was bad…
I thought I had the perfect “clunker”: a ’71 Chevy pickup that gets 9 MPG and belches smog. Since I commute 25 miles per day I wanted a nice small car that gets 30+ mgg. No such luck! It turns out C4C is only for semi-clunkers, not real ones like mine! Typical government BS.
Ideology is literally destroying decent cars; whereas, the Cash for Clunkers ran out of cash in 7 days! I cannot see this is a success, but stupid politics playing a game where a game should not be played. John McCain is leading a filibuster to stop the additional $2 billion dollars to go out to be flushed by the politicians. Will a filibuster succeed given 60 senators are up for re-election in 2010?
Honestly, i can’t remember such incessant whining. This relentless negativity is only digging the hole deeper for conservatives and Republicans. And when economic indicators continue to gain steam and consumer confidence starts its rebound, all of your certainty and outrage will be unmasked as nothing more than, you guessed it, whining.
Hey, I hear the Palins are divorcing.
Now and Then: Whining? Who’s whining? I guess only a liberal would see pointing out how the government is going to trash perfectly good transportation as “whining”.
Hey, I hear Obama’s poll numbers are still in the toilet (not sure if that ties into your typical braindead liberal Palin jab, but it was fun to point out nonetheless).
Now & Then, I remember the incessant whining coming from the Left for 8 years; however, in our case, we are not whining. The Cash for Clunkers is a bad deal all around. Why is the government paying people to buy their cars? Worse, they are already out of the money that was meant to last until October when the next year’s budget is made. None of it happened to plan because the politicians have no idea what they are doing; they should be out of the car business. Cash For Clunkers is a harbinger of things to come with the euthanasia called Obamacare.
As for your Sarah Palin dig, you’re wrong. I heard Sarah died & resurrected herself on the Starcore One Space Shuttle that landed in Jamaica Bay; she used her new powers to save the others. She calls herself Phoenix. See, I can make up rumors as easily as you, but mine are far more imaginative, although certain fiction.
N&T: guess what? The economy will get better much faster without all this crap. Your last sentence just tells everyone you will believe anything that is put in the media, and that is the reason you voted for the most ignorant president our country has ever seen. What did you hear on TV today in the 15 second sound bites? That our economy is rebounding? That “our unemployment is still high, but it is understandable there will be a lag”. There is nothing negative about people complaining that their country torn apart by a bunch of as*h**es, and being cheered on by butt heads like you. We only get one chance to make this right, and so far everything has been done wrong. We’re in the same country and when you are out in the street with the rest of us, please feel free to keep blaming it on Bush. You people are despicable. Tell me one good thing about this program – just one – that benefits our country. Who the hell gave you the right to take my tax money for making poor choices?
Call me a doubting Thomas, but I really don’t believe that the cash has run out already. First, there were problems with the government website slowing down, then there are problems qualifying for the program, and what about the delay in verifying the sale and transfering the titles of the car? I just don’t believe that any government program could dole out money that quickly. I wouldn’t doubt if we hear Monday that dealers only spent some of the money (or only some of the sales qualified) and the dealers are finding it hard to get their money from the fed.
At any rate, here is what I find offensive. Congress is going with a knee jerk reaction by throwing more money at this program. From a purely rational point of view, doesn’t it make sense to evaluate the outcomes of the program before you double or triple the budget. Let’s take the argument that this program has helped the dealers sell a backlog of inventory (again, I doubt there were some 250,000 cars sold under this program in a couple of days). How much more money needs to be spent to clear out their backlog? If Congress doubles or triples the program, what will be the effect of more bad car loans, where are the dealers going to send 1,000,000 unusable engines and drivetrains, and what about all of those spare parts sitting out there going to rust? And what about the money we are spending to help the dealers and the unions? We are talking BILLIONS of $$$! In a time where states can’t meet their budgets, families are going backrupt, and banks are foreclosing on businesses, it is really worth spending billions more (that the government has to borrow) so people can buy a new car?
And this is the same entity that wants to control health care.
I am reminded of that movie
”Full Metal Bods”
Here you go-
Enjoy your new car 4,500 dollar clunker trade ins..
Taxpayers get on your faces,
push up position!
They’re enjoying it-
you pay for it!
16. vech:
“Tell me one good thing about this program – just one – that benefits our country.”
They sold 250,000 cars in one week. It’s a disaster!
This really is one of the most appalling things to come out of this administration yet. If they want to boost car sales through subsidies, fine, whatever. We’re broke anyway so what’s another billion.
But requiring the cars traded in to be destroyed is disgraceful. 250,000 working vehicles that could have been sold, or given away, to people who could use them, but President Marie Antoinette says “Let them drive Priuses”.
If the cars turned in had an average value of $2,000, that’s $500 million of wealth destroyed for no reason. And now Congress is throwing another $2 billion into the pot, so a total of roughly 750,000 cars worth $1.5 billion can be destroyed.
As others have pointed out, these are the people who want to control your health care.
Here’s the “genius” of Obama’s cash for clunkers. Progess?
http://www.youtube.com/watch?v=waj2KrKYTZo
Looks like they took the 2010 Camaro off the list. Dang. I might have brought one if it was still included.
Now and Then: What the hell is good about the government buying 250,000 cars? Only a liberal would say that’s a good thing. Government needs to stay out of the private sector. You lost your credibility when you continue to spread the Palin/todd divorce rumor. Only God knows where you get your information.
21. David:
“But requiring the cars traded in to be destroyed is disgraceful. 250,000 working vehicles that could have been sold, or given away, to people who could use them,”
Wasn’t the objective to reduce oil dependence?
Surely after this car-buying blitz is over the industry will be facing a serious slump.
I can hardly wait until GM starts turning out those green cars designed by commitee. The only ones who will drive them are the true believers. They will be self-identifying.
I don’t understand the economics of this. The gov’t is subsidizing by $4,500 the purchase of one of a certain group of new cars but only for an owner of a certain group of old cars. How does that subsidy effect the dealer’s price? Does the dealer offer the lowest possible price or does he say he’ll take $500 of the subsidy by, say, adding $500 worth of dealer installed options?
Then, where do the administrative costs of the program come from and have they already been “given” to Murtha’s nephew or Biden’s son.
If we assume that all clunker’s will be destroyed, who will pay to park/store the clunker from the time it is purchased to the time it is trucked away? Who will pay for the shipping from the clunker lot to the destruction point? Who will pay for the destruction? And, who will pay the costs of all associated paper work? There is a LOT of room for pieces of our 1, 2 or 3 billion dollars to grease a lot of the friends/relatives of Congressional democrats or Chicago criminals!
Can you see the profit potential or relocating trucks loads of clunkers to Mexico where, with new paperwork, they could be sold at a nice profit? After all, the crooks (see above) could acquire that inventory at almost no cost.
And, what does this do to the used car industry in the US. Does AutoNation still exist?
Can you believe that, after 5 months to set up this program, the government can’t even keep track of who got the first billion dollars for their clunkers. Sheesh. Wait until we get the health care program.
How many jobs did this give-away create? Are the assembly lines rolling again or did they just reduce the surplus population of unsold cars?
My tax money went to help someone purchase an econ-car? Was that government mandated generosity on my behalf?
Many vehicles won’t qualify for a voucher because of all the restrictions. In those cases, charity car donation is a good option. the donor gets a tax deduction and the charity gets the proceeds from the sale of the car.