Wednesday, May 13, 2009

Have you seen the cash for clunkers plan?

The concept of a cash for clunker plan can be a good one. Give a consumer a financial incentive to trade in their gas guzzler for a more efficient vehicle - the consumer wins, the environment wins and the free market takes a little jab on the chin.

However, as currently constructed this plan looks like it was written by either the CEO of Hummer or by a bureaucrat that really wants to give away taxpayer dollars.

To qualify for a $4,500 voucher if you are replacing a passenger car, you would have to buy a new passenger car which gets 22 mpg and gets at least 10 mpg more than your old car. Sounds good enough.

To qualify for a $4,500 voucher if you are replacing a large light duty truck, you would have to buy a new truck that gets an AMAZING 15 MPG and gets AT LEAST 2 MPG more than you old truck.

If your old truck achieved 13 MPG and you drove 10,000 miles per year you'd burn through 769 gallons of gas/year. If you take advantage of the cash for clunker voucher and upgrade to a truck getting 15 MPG you now use just 667 gallons of gas. You'd save over 102 gallons of gas per year. Even at $3 gas, it would take almost 15 years to realize $4,500 in savings from this clunker of a program.

Min Fuel Economy for New Vehicle $3,500 Voucher $4,500 Voucher
  1. Passenger Car 22 mpg (EPA combined) Mileage gain at least 4 mpg at least 10 mpg
  2. Light-duty truck 18 mpg (EPA combined) at least 2 mpg at least 5 mpg
  3. Large light-duty truck 15 mpg (EPA combined) at least 1 mpg at least 2 mpg

Thankfully this program is still being formed. Hopefully, someone will make the adjustments to make this program a valuable shift in policy rather than just another handout to the auto industry.

Cheers!

1 comment:

Anonymous said...

The problem with the US car industry is that the manufacturers turned over the "Heart beat of America" to essentially the bottom dwellers of America, to sell their products.

If Zogby ran a poll that asked "who do you trust more, an ambulance chasing lawyer, or a car salesman", I would bet the lawyer would actually win.

That's why foriegn cars sales have been so successful is the US. Because if you go in to buy a Toyota, a Mercedes, a Nissan..., you know the price, and you then decide if you want the car.

If you go in to buy a Chrysler, GM, Ford, the sales man goes in the back to talk to the "Sales Manager" who then comes back out and talks about what the "general manager" thinks about selling cars at the end of the month , blah, blah, blah......

I would rather (as would apparently most americans) actually pay more money to not have to deal with a sleeze bag US car salesman. Every time you go in to look at a US car, it seems like you have to take a shower afterwards.

And this isn't really a diatribe against the hard working people who actually sell the US cars. It is really an inditment of the system and protocols on the way the dealerships operate.

In virtually any other business, the way US cars are sold would be considered a felony (how to screw a consumer out of as much money as possible).

Now the ultimate screwing: take the money direct from the people through using their taxes to prop up the faulty system.

SMTF