Feds: Cash for Clunkers Saving Gas
By Michelle Krebs August 4, 2009Pressing U.S. Senators to pass a $2-billion extension to the Car Allowance Rebate System
(CARS) -- the riotously accepted "Cash For Clunkers" program projected to run through its original $1 billion backing in little more than a week - the Obama administration is citing the program's impact on reducing fuel consumption.
A note from the administration reportedly being distributed to lawmakers says the average fuel-economy gain between traded-in clunkers and the new vehicles purchased to replace them is 9.6 miles per gallon -- a 61 percent improvement. Purchased vehicles that improve fuel economy by at least 4 mpg net the clunker owner $3,500. New vehicles that achieve 10 mpg or better than the clunker they replace win the owner a $4,500 CARS rebate.
The average fuel economy of a new vehicle purchased through CARS is 25.4 mpg; the average fuel economy of traded-in clunkers: 15.8 mpg.
The share of the program going to new vehicles sold by Ford Motor Co., General Motors Co. or the Chrysler Group LLC is 47 percent. And the best-selling model so far has been the Ford Focus.
Another good tidbit: 83 percent of traded clunkers so far have been trucks -- not surprising because trucks typically have lower mpg ratings, but also because most light trucks traded for another light truck (a clunker minivan traded for a new minivan, for example) only have to achieve a 2-4 mpg improvement to get the $3,500 and just a 5-mpg hike to net the full $4,500 rebate.
Larger full-size pickups and other new "Category 2" trucklike vehicles must get at least 15 mpg -- but only have to achieve a 2-mpg gain when traded for a similar vehicle to get the $4,500 rebate.
But a not-intensely-deep scrutiny of the results might cause proponents to tone down the environmental ballyhoo. While the replacement of old vehicles with new models is a laudable start, if this first-phase CARS program serves its projected 250,000 customers, that number of "replacement" vehicles represents about one-tenth of 1 percent of the approximately 250 million passenger vehicles on U.S. roads.
In other words, it will cost U.S. taxpayers $1 billion to obtain an average 9.6-mpg improvement for one-tenth of 1 percent of passenger vehicles in the nation. Will somebody qualified step up to say if that gain is "worth it?" -- Bill Visnic
Photo by Ford
The Ford Focus was the best-selling model under the government's Cash for Clunkers program.
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Click here to comment on this entry.Well thank the Repubs for watering down the original rules which had higher mileage requirements and were supposed to offer the rebate only for American auto companies. Next time maybe it would be better to offer less' cash to each buyer and also require higher fuel efficiency ratings than a mere 2 mpg improvement. (Although for trucks that may be the best that's now even on the road). That way perhaps the funds would be available to more potential buyers. And yes, frankly, why shouldnt all, or higher rebates go to those buying new cars from American car companies? Are we that afraid that the Koreans and the Japanese will start subsidizing their cars in their countries? Well cosnsidering US cars allowed for importation into those countries only constitute a small percentage anyway, it's not much of a credible threat.
I agree with pfine. Also Edmunds seems to have taken joy in pointing out any little issue with the CARS scheme. It is popular, it helps the environment and cut our dependence on foreign oil and it helps auto companies (and employment). Thats a win-win-win. Whats the problem. Thos first 250000 sales are 4% of this years expected sales/ Not all 250million cars/trucks in America actually run and are driven. I see lots just left on peoples lots rotting away. So 0.1% is very misleading. I expect more from Edmunds.
It's only popular because it's free money. And just because it's popular doesn't make it a win. It marginally helps our environment - and people should really take it upon themselves to want to help the environment. And if you want government intervention - they should penalize to force the change, not subsidize the change. (bump this old thread for relevance - http://www.autoobserver.com/2009/01/higher-gas-tax-could-drive-buyers-to-fuel-efficiency-edmundscom-says.html). And I would wager that this helps get rid of a lot of excess inventory - auto companies will still probably scale back supply, thus no help to employment.
Edmunds is doing a great job. If they weren't, you wouldn't be here reading.
And to the point about restricting it to American car companies, that's great. Don't just use my taxes for something I don't agree with, but don't even give me the choice of who I can use it for either. Ridiculous.
Hosen - unfortunately in a democracy your taxes will be used for somethings you (or I) don`t agree with. That covers all policy areas (the military, welfare, education etc).
I am all for a higher gas tax, but it has also been shown that incentives rather than or in addition to penalties can produce results.
I agree inventory has been run down - one week of the program and now inventory is low for many cars. If that continued they would therefore have to produce more cars because they are selling them much more quickly than expected. It is not sustainable in the long term but during a recession you want to stimulate demand until an economic recovery makes it self sustaining (until the next recession at least!)
Too bad this program allows people to buy more clunkers.
with - your post doesn`t make sense. All the cars people are buying have significantly better fuel economy, are new and therefore more reliable (in general) and safer.
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