Cash for Clunkers Legislation Eyed for Tuneup
By Bill Visnic May 13, 2009By Bill Visnic
The U.S.'s "cash for clunkers" legislation earmarked to both prop up the auto industry and improve the environment is sputtering along without resolution, hampered by compromises forced by trying to attain two worthy but dissimilar goals.
The proposed used-vehicle scrappage legislation, it is hoped, will incentivize Americans to trade in older, less-efficient (and higher-polluting) models for a new vehicle, both stimulating the auto industry and the economy and also helping air quality. But muddy details, dual policy goals and squabbling constituencies have turned what seems like a good idea into a political quagmire.
"Because this program aims to achieve both environmental and industry goals, it falls short in both directions," said Jeremy Anwyl, CEO of Edmunds.com, parent of AutoObserver.
"If the administration is serious about boosting car sales in order to jump-start the economy, it can do much better," Anwyl said flatly, adding that the currently proposed legislation's provisions may encourage those typically not in the market for a new vehicle to "stretch beyond their means -- the very problem that caused our economy to collapse."
He leads a growing cadre of auto-industry analysts and constituencies saying the proposed legislation needs to rid itself of its current Byzantine stipulations, conditions and half-measures and get down to the business for which it mainly is intended: boosting U.S. auto sales.
Senator Debbie Stabenow (D-MI) agrees, saying in a USA Today.com editorial on Wednesday the first and main purpose of the legislation should be to help automakers and dealers, "filling showrooms with customers and moving cars off lots."
Stabenow is part of a bipartisan-led "fleet modernization" version of the Cash for Clunkers legislation that is believed to simplify the program, focusing on providing prospective buyers with government-paid vouchers of up to $4,500 to trade for a new vehicle. In the editorial she references the "Drive America Forward Act," but at presstime a call to Stabenow's office for details of the legislation had not been returned.
And on Tuesday, House majority leader Steny Hoyer (D-MD) said he is amenable to speeding passage of the Cash for Clunkers bill by emphasizing the stimulus portion and keep it from becoming a part of sweeping environmental legislation (proposed by California Rep. Henry Waxman) that may take months to complete and shepherd through Congress.
Edmunds.com's Anwyl recently said that foot-dragging on the legislation is unadvisable and dangerous -- it may cause consumers to delay a new-vehicle purchase until the legislation is finalized.
"Congress needs to pull the trigger quickly and to make this program retroactive just as the new-car tax credit was," said Anwyl.
Also taking odds with the current provisions of the legislation are constituencies such as the Association of International Automobile Manufacturers and the National Automobile Dealers Association. They say provisions such as the cap on new-vehicle MSRP, the low 18-mpg combined fuel-economy minimum to make a used vehicle eligible and other aspects of the bill will thwart the primary intentions.
It is not yet known whether the Drive America Forward Act addresses these issues and is intended to be a bill separate from the climate legislation to which Rep. Waxman proposes the Cash for Clunkers legislation be attached.
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Click here to comment on this entry.I'd love to see a cash for clunkers bill go through FAST with a scrappage requirement.
Is the $4,500 and addition to what you would get from the dealer on a trade in? If my trade in was worth $5,000 would I get $9,500 or just the $4,500.
Scrap means just that. Your trade in transform into scrap metal. You only get that $4500.
This bill just might get more support if a consistent "green" spin where put on it. Call it "Cash for Guzzlers" as has been already done in some media outlets. The sole criteria for a voucher is MPG improvement. Most people think of clunkers as old and junky. In reality, the owner of a relatively new full size SUV, such as a Suburban or Escalade or Expedition or Navigator, could get out from under that vehicle with this program. Any many of these folks would like to, since they are upside down on payments and the voucher would help.
stove1 stepped on the weak floorboard of the Cash for Clunkers deal that is so far going nowhere.
Why indeed do you need to TRADE IN your current vehicle to qualify for the C4C money with no option to sell it outright? The trade could conceivably be undervalued and/or the new vehicle be marked up by either the OEM or the dealer or both. If the trade is worth $5000 you ought to get the $9500. A 5G unit ain't even going to no crusher lately. It's going right out on the lot at $7495 this week only. And your new '09 or '10 could have reduced or completely eliminated incentives. Yes, dealers need to improve their balance sheets, too. But there is a fine line between gouging and creating a sellers' market.
Here's my deal:
1) Buy or lease any new vehicle, any type, that gets the same or better combined mpg than your trade did when it was new.
2) Receive an income tax credit on your '09 income tax of $2500 retroactive from May 1st thru Dec 31st, 2009. An income tax credit instead of a rebate would serve to discourage dealers from low-balling the trade and/or "blinging" the new vehicle with dealer installed accessories such as a $200 tape stripe.
3) Used vehicles, Hybrids, All-electrics, etc. get dealt with in Senator Waxman's or some other legislation. It's the economy more than the environment that needs to be addressed here.
i've sent this proposal as part an email to my congressman and I encourage all of you folks to contact your representatives and pass along your thoughts and ideas.
Do it or don't.
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