'Cash for Clunkers' Shifts to Senate and Fight Between Sales and Fuel Economy
By John O'Dell June 3, 2009
Today may be the last opportunity for environmentalists to regain some of the ground lost as cash for clunkers legislation has morphed from being a green measure aimed at removing the dirtiest and lease fuel-efficient vehicles from the road to being a tool to boost flagging new car sales.
As the U.S. Senate tackles the issue of paying consumers to take older, dirtier and less-efficient cars and trucks off the road, senators will be asked to vote on two measures - one favored by green groups, the other by the auto industry.
Both measures would require that vehicles traded-in be sent to the scrap yard and both would permit the trade-in voucher to be combined with manufacturers' incentives when buying a new car ot truck.
The bill that appears to have the best chance, S.1135 by Sen. Debbie Stabenow, a Michigan Democrat, closely parallels a measure that has stalled in the House but is being backed by President Obama.
It would establish a government-funded program to encourage people to send their gas guzzlers to the scrap yard by offering "trade-in" vouchers worth either $3,500 or $4,500 toward a new car or truck, depending on the fuel economy improvement it would represent.
Cars to be scrapped would have to have EPA combined fuel economy ratings of 18 miles per gallon or less, and new cars would have to get at least 22 miles per gallon.
The gap between trade-in and new vehicle narrows and finally disappears in the truck categories: The owner of a heavy duty work truck could get a $3,500 voucher by trading it in for a vehicle of the same or lesser weight, even if the new truck offered no improvement in fuel economy.
A counter-measure to be introduced by California Democrat Sen. Diane Feinstein and several co-authors would lower the maximum fuel economy for cars and trucks to be traded-in and raise the minimum fuel economy for new vehicles to be purchased.
Feinstein's office claims it would result in a 32 percent increase in fuel saved compared to the Stabenow bill.
In the passenger car category, for instance, the Feinstein measure would require cars that are traded-in to have EPA combined ratings of 17 miles per gallon or less, and the cars to be purchased to be rated at a minimum of 24 mpg.
It establishes three levels of vouchers - $2,500, $3,500 and $4,500, depending on the fuel economy improvement - and provides $1,000 vouchers to be used when trading in a qualified gas-guzzler and purchasing a used car.
An Edmunds.com analysis of the market going back to the 1990 model year shows that there are 11,364 models (various engine and transmission combinations) that are rated at 18 miles per gallon or less; but only 9,391 rated at 17 mpg or less.
The Feinstein measure's improved fuel savings has won it the backing of most major environmental groups.
But the Stabenow bill's potential to result in more new car and truck sales because of its larger universe of qualified trade-ins has won the backing of the U.S. chamber of Commerce and the Alliance of Automobile Manufacturers, the trade group that represents the domestic automakers and Toyota Motor Corp. and several other large import brands.
We believe a cash-for-clunkers measure ought to satisfy both camps, achieving the maximum possible environmental benefit while encouraging the largest possible number of new car sales.
Of course that would require cooperation between competing camps and that doesn't happen much theses days - although insiders tells us that supporters of the Feinstein measure don't expect it to prevail but are hoping it will force Stabenow to improve the fuel efficiency aspects of her bill.
Absent a reasonable compromise that would also increase the value of the scrappage vouchers to make them attractive to more people (as it stands, if you have a trade-in worth more than $4,500 you'd be better off, financially, to do a regular trade-in and not turn the car or truck in to be scrapped), we come down on the side of improving fuel economy.
John O'Dell, Senior Editor
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