New bill to scrap clunkers...good idea?

[JWC]

This came up in another thread, I assumed it had been mentioned here already, but evidently not.  It has been making the rounds of other car forums, without a lot of support I might add.

"Automotive News
March 18, 2009 - 12:41 pm ET

A bill introduced yesterday in the U.S. House of Representatives would give consumers between $3,000 and $5,000 through the 2011 fiscal year if they turn in aging vehicles in favor of more energy-efficient transportation options.

The bill, written by Rep. Betty Sutton, D-Ohio, would give vouchers for buying new vehicles or using mass transportation in exchange for scrapping vehicles that are at least eight years old. The vehicles purchased would have to be from the 2009 model year or later and have better gas mileage than the car scrapped. Cars also would have to achieve at least 27 mpg on highways, and light trucks would have to achieve 24 mpg. More fuel-efficient cars and those assembled in the U.S. would qualify for higher voucher amounts.

The bill is the third scrappage incentive proposed in Congress this year.

The measure is supported by the Detroit 3 and the UAW, but as was the case with the first two bills, the Alliance of Automobile Manufacturers doesn't support it as written. Its opposition stems from unequal treatment of automakers, a spokesman Charles Territo said.

Sutton's bill would give a $3,000 voucher for using mass transit, up to $4,000 for buying vehicles assembled outside North America and up to $5,000 for buying vehicles assembled inside North America or any registered work vehicle. Qualifying vehicles would require a suggested manufacturer's price of $35,000 or less.

Starting with the 2011 model year, the bill also would allow consumers to receive a $7,500 cash voucher for purchasing a plug-in electric hybrid that gets at least 100 mpg."


My feelings should be that it is a good idea.  I'm in the new car business and I'm seeing first hand how hard the economy is hitting car dealerships. 

On the other hand, I'm the owner of four classic vehicles.  Okay, I consider them classic.  My thoughts are that any legislation designed to remove from the nation's highways cars and trucks that are deemed too old, too fuel inefficient, or bad for the environment, is a bad move.  While such a move can invigorate the new car manufacturers, it also has the potential of closing a lot of non-oem parts manufacturers, parts suppliers and independent garages, costing thousands of jobs that local economies depend on.

[S204STi]

Great, so they want to "give" me money in order to take a perfectly good vehicle on which I have no lien and trade it in on a new vehicle, take the depreciation hit on top of now having a payment to make most likely, all so I can get a marginal increase in fuel economy?

Fuckin' stupid.  Ridiculous.

No offense John, I just don't see it being a good deal unless you were already in a position to buy one.

[Rupert]

I dunno. I think a lot of people could benefit from this, and I don't think a lot of classic car people are going to be affected by parts sellers and makers are going to be affected. Seems like the typical trade-in would be from an already middle-class family, and the typical car would be an appliance.

[Rupert]

Great, so they want to "give" me money in order to take a perfectly good vehicle on which I have no lien and trade it in on a new vehicle, take the depreciation hit on top of now having a payment to make most likely, all so I can get a marginal increase in fuel economy?

Fuckin' stupid.  Ridiculous.

No offense John, I just don't see it being a good deal unless you were already in a position to buy one.

Not to mention the environmental costs of manufacturing a new car...

However, I don't think it's intended for anyone who isn't already thinking about a new car.

[JWC]

My feelings are that the person who introduced this bill doesn't realize how many jobs depend on older cars.  Parts are always going to be available to some extent, but affordable parts, may not be.  Some of the companies that supply parts for VW's also supply performance parts for "newer" cars and SUV's.   Cost wise, everyone benefits from a strong aftermarket parts business.

I'm also reminded of what happened in California in the late '70's and early '80's when the first scrapping law came to be.  An L.A. car columnist visited a scrap yard after the law had been in affect for several months.  There he watched classic cars being demolished.   Among those he witnessed being crushed was a Corvette, couple of TransAms, numerous Mustangs, including a Shelby.  In other parts of the U.S., muscle cars started gaining in popularity again and subsequently the prices for those cars went up.  As the prices went up, as nostalgia for those classics grew, California changed it mind.  In the Bay Area, we had two cars scrapped that I really wanted to buy.  Each was in good shape and both were only $500.00, but I didn't have a place to store them. One was a Triumph Stag.  The other a Studebaker Hawk.


There is an old story in economics about a broken window.  Here is one version of it:  http://freedomkeys.com/window.htm

Trying to save the Big 3 at the expense of other parts of the industry just pisses me off.

[dazzleman]

I think it's a great idea if we want to keep increasing taxes and the public debt in order to buy people new cars.

Why stop there?  Let's just print all the money necessary for everybody except those evil 'rich' people to have all the necessities of life.  I'm sure the Chinese need an investment vehicle badly enough to eep funding our deficits on those terms....

And John, why would you think the people who introduced that bill either (a) have any understanding of the economic ramifications of it; or (b) care?

I also like Roy's point -- let's take people with paid off cars and give them an incentive to go into debt.  We need to pump up the debt more to get the economy going again, right?  It was horrible when Bush did, but now it's a great idea...

As you can see, I don't like the idea.

[Galaxy]

In a way it's nice to see US politicians copying Germany. 

http://www.dw-world.de/dw/article/0,,4070176,00.html

It did boost German car sales in February by 21.5% compared to February 2008. However economists are here are still debating whether or not it was a good or bad idea. There is no real consensus.

[ChrisV]

Time to hit up Craigslist and buy a $100 used car to turn in..

[Galaxy]

Time to hit up Craigslist and buy a $100 used car to turn in..

Which is why it will be required that the car be in your name for X amount of month.

[S204STi]

Trying to save the Big 3 at the expense of other parts of the industry just pisses me off.

I think this is why governments shouldn't be allowed to meddle in anything other than national defense and infrastructure.  Invariably stupid ideas end up becoming reality.

[hotrodalex]

I think this is why governments shouldn't be allowed to meddle in anything other than national defense and infrastructure.  Invariably stupid ideas end up becoming reality.

[AutobahnSHO]

This is retardedness disguised in some ideas that, at first, sound great.

-we're getting older (ie not as safe or efficient!) vehicles off the road
-helps the automakers
-helps anyone who is planning on buying new car (are those the same customers that are driving 8 years old cars? - I thought new car buyers keep them 3-5years??)
-won't hurt the national debt at all
-should be super easy to fill out the paperwork
-might even help kill off those pesky parts of the economy that are based on a rational buyer/ seller relationship
-will help banks to get more repos....

[NomisR]

This sounds like a really great investment opportunity like ChrisV mentioned.  Spend 2000 and buy 20 $100 cars, scrap them, and now you have yourself a free M3!  Sounds good to me.  Spend more and I can get the government to pay for my Ferrari!

[93JC]

I've heard of initiatives like this being proposed before, and I still think they're fundamentally for the greater good in a happy, makes-people-feel-fuzzy kind of way, like buying a 13 W fluorescent light bulb to replace a 60 W incandescent.

However I don't think it will do much good in practice, since most old clunkers will be off the roads through attrition anyway. All it will do is increase the financial burden on taxpayers.

[MX793]

This sounds like a really great investment opportunity like ChrisV mentioned.  Spend 2000 and buy 20 $100 cars, scrap them, and now you have yourself a free M3!  Sounds good to me.  Spend more and I can get the government to pay for my Ferrari!

You only get the voucher if you replace the old car with a new car that gets at least 27 mpg.  And they give you cash after you've bought the new car, they don't just mail you the check for scrapping the car.

[ifcar]

You also have to have had the other car for a certain amount of time.

[sportyaccordy]

The bill would not give them the money. The American tax payer would. More debt. Awesome

[Raza]

The bill would not give them the money. The American tax payer would. More debt. Awesome

You do know that governments are funded mainly by taxes, right?  So every time they buy new pens...

[Xer0]

This is one of the wierdest ways to subsidize an industry I have ever heard and with the buy American incentive (nevermind if its made in Mexico or something), its a clever way to sneak in some protectionist ideas too.  Either way, I think this is stupid for the most part.  More expensive cars don't just carry a higher sticker price, maintanence and upkeep will also likely be more expensive putting people into cars that they shouldnt be able to afford to keep.

Even then, scrapping a car?  Is that really needed? 

[Galaxy]

The people who keep cars for many, many years are typically not the type who overburden themselves with debt. These people usually drive their cars until they break down completly. It is hoped that this subsidy could entice them break with their cycle put their own money into the market on top of the subsidy.

[MX793]

This is one of the wierdest ways to subsidize an industry I have ever heard and with the buy American incentive (nevermind if its made in Mexico or something), its a clever way to sneak in some protectionist ideas too.  Either way, I think this is stupid for the most part.  More expensive cars don't just carry a higher sticker price, maintanence and upkeep will also likely be more expensive putting people into cars that they shouldnt be able to afford to keep.

Even then, scrapping a car?  Is that really needed? 

The incentive would apply to cars assembled in America, not just American brand cars.  "Imports" like the Toyota Camry, Honda Accord, Hyundai Sonata, Subaru Legacy and many others are built in America and would be eligible.  Meanwhile, "American" cars like the Pontiac G8, Saturn Astra or Chevy Aveo would not qualify (I'm assuming Mexican and Canadian assembled cars qualify as being assembled in America).

And maintenance on a brand new car should not be more expensive than that on an older car.  New cars rarely need parts replaced, and if they do, those parts are often fully covered under warranty unless they broke because of something the owner did.  Older cars (especially when we're talking 8+ years old) very often will need something repaired or replaced, be it new motor mounts, wheel bearings, starter motors, alternators, CV joints, shocks and springs, muffler/exhaust, emissions equipment... and these would come out of the owners' pocket.

[Xer0]

The incentive would apply to cars assembled in America, not just American brand cars.  "Imports" like the Toyota Camry, Honda Accord, Hyundai Sonata, Subaru Legacy and many others are built in America and would be eligible.  Meanwhile, "American" cars like the Pontiac G8, Saturn Astra or Chevy Aveo would not qualify (I'm assuming Mexican and Canadian assembled cars qualify as being assembled in America).

Doh!  I miss-read that part

And maintenance on a brand new car should not be more expensive than that on an older car.  New cars rarely need parts replaced, and if they do, those parts are often fully covered under warranty unless they broke because of something the owner did.  Older cars (especially when we're talking 8+ years old) very often will need something repaired or replaced, be it new motor mounts, wheel bearings, starter motors, alternators, CV joints, shocks and springs, muffler/exhaust, emissions equipment... and these would come out of the owners' pocket.

I was thinking more of instead of buying a Civic LX, now you would buy a Civic Si because of the voucher rather than an old to new comparison. 

[MX793]

Doh!  I miss-read that part

I didn't read it completely either, since it also says that Sutton's bill would also offer an incentive on cars built outside North America, but the incentive would be smaller than the one offered for buying a car assembled in North America.

[rohan]

Great, so they want to "give" me money in order to take a perfectly good vehicle on which I have no lien and trade it in on a new vehicle, take the depreciation hit on top of now having a payment to make most likely, all so I can get a marginal increase in fuel economy?

Fuckin' stupid.  Ridiculous.

No offense John, I just don't see it being a good deal unless you were already in a position to buy one.

Not to mention aren't a lot of the older v6's and 4's more economical and get better mileage?  I can remember when most v6's were getting 30ish.

[ifcar]

Not to mention aren't a lot of the older v6's and 4's more economical and get better mileage?  I can remember when most v6's were getting 30ish.

Right, before they changed the way they test for fuel economy. Few if any 10-year-old V6 cars get 30 mpg on the highway under the current testing standard.

Also, there's a provision requiring you to get a car with better gas mileage than what you're trading in.

[the Teuton]

So who wants to buy my $800 car from me for $2,000?  You're still making money on this deal.

[sportyaccordy]

You do know that governments are funded mainly by taxes, right?  So every time they buy new pens...

Yea but the way the article was worded it made it seem like the $$$ would come out of thin air.

[MrH]

Horrible idea, but it makes me want to buy a big, old beater in case this does pass.