RED ALERT: The "Cash for Clunkers" program is being shut down on Monday, August 24, 8pm EST, according to news reports.
As such, the essay below is now essentially quite dated. However, it may be regarded as part of the national discourse about this program.
Something for the history books, y'know....
ON JUNE 25, US President Obama signed the Consumer Assistance to Recycle and Save Act (CARS), more colloquially known as "Cash for Clunkers."
The program began operating in late July and is scheduled to end November 1.
What "Cash for Clunkers" does is offer consumers up to $4,500 towards trading in older gas guzzlers. The trade-in must be less than 25 years old, that is, made after 1984--so your 1960s and 1970s gasoline inhaling land yachts are ineligible--and get 18 miles/gallon or less.
This bribe--excuse me--incentive is not really to convince consumers to purchase hybrids or vehicles with better fuel economy.
According to an ICIS colleague, who wished to retain his anonymity:
The point of the program is NOT to get people to purchase hybrids, or even very efficient traditional cars, mainly because the American car companies have so few of them. That's why the standard for the replacement cars is so low: 22mpg.
Quite simply, the program is intended to get people spending money again, (with the threshold set deliberately low to qualify plenty of US models), since consumer spending is 70% of the economy, and car sales are a very large--if not the largest--portion of that.
But more importantly, the 18/22,mpg differential is so small that environmentally, and energy-wise, it's probably NOT worth doing, when you consider the energy embodied in the manufacturing of the cars (both the old one and then new one) themselves.
If you go out and buy compact fluorescent light bulbs (CFL), do you then replace (and destroy) all the incandescent ones? No. You wait until the incandescent ones die, then replace them. Or at least, replace only the most-used bulbs in your house, and save the incandescent ones for places where it doesn't make much sense to use an expensive CFL, like in the closet, where, because the light is on just a couple of minutes per day, you would NEVER recoup the high cost of the CFL through energy savings. (The car analogy to this is relegating the big gas guzzler to weekend trips to the hardware store, or for use only for shorter trips around town, while someone else is using the more efficient one for longer trips.)
The government originally allocated $1bn (€707.5m) to the program, but that was gone in about one week, with roughly 245,000 transactions taking place. But you do not get the money then and there at the car lot, nor do you get it placed towards a purchase.
According to some web commentators, the consumer must put the money up front and then the dealer will apply for a rebate. Meanwhile, the dealer cannot get the rebate until the vehicle is rendered inoperative (more on that in a moment).
Ford Motor, Honda and GM say that because CARS has been so popular they will increase production to meet demand, which is great for chemical companies that supply the auto makers.
But "We have crammed three to four months of normal activity into a few days," said Jeremy Anwyl, CEO of car buying guide Edmunds.com, in an editorial for The Wall Street Journal. "What everyone fails to realize is that once the backlog is met, interest in the program will fade."
A few things bug me about CARS, with the first stemming from jealousy:
I use public transportation and my wife drives a car with great fuel economy, but is old.
So for us? Zero.
But my taxes still get used for this. Great.
Secondly, the motor of the old "clunkers" must be rendered inoperable, destroyed essentially--which means there's no recycling going on besides melting now-useless engines into slag.
Meanwhile, parts for older cars--because some people are not going to turn in their cars--will be more difficult and expensive to find.
Unless owning certain cars becomes illegal--but I better shut up about that: I don't want to give anyone any ideas.