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Thursday, May 7, 2009

Time for a new ride?


(photo credit Wen-YanKing via the Flickr Creative Commons license).

The Cash for Clunkers Agreement is a short-term attempt to stimulate consumer spending on new cars, nothing more, nothing less. It's a no-brainier from a political perspective because voters will support any program that will give them thousands of dollars to trade in a junker for a new car.

It is also another example of why you should not be waiting for politicians to fix global warming. The global warming impact of making a new car nullifies any savings from the marginally better gas mileage required to qualify (click to enlarge):



As with corn ethanol policy, they are about to make things worse again by taking two steps back for every step forward.

There are a lot of questions as to how it will work. Here are just a few:

  1. Can I just buy a junk car for a few hundred dollars and turn it in?
  2. If I turn in my SUV do I have to buy another SUV instead of something like a Prius?
  3. Can I turn in the car I keep parked in the alley for hauling junk twice a year?
  4. Will all cars turned in be scrapped, including cars that get much better mileage than others being turned in?

I don't know the answer to any of these questions but I don't think they matter. The government is just trying to get you to go buy a new car to clear the inventory on dealer lots. Dealers sure won't care about what you turn in. You could probably get $4000 for your grandma. But if the answer to question 2 is yes, then this piece of legislation has taken your usual inept government bungling to a whole new level.

For more on the topic:

http://www.guardian.co.uk/commentisfree/2009/mar/10/car-scrappage-payments

http://greeninc.blogs.nytimes.com/2009/04/06/are-cash-for-clunkers-programs-green/

http://wheels.blogs.nytimes.com/2009/05/06/congress-close-on-cash-for-clunkers/

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1 comment:

  1. The more I think about this the more questions I have. You would only do this if your clunker is worth a lot less than the voucher price. If your car was worth $3500 in the used car market and the voucher $4000, you only gain $500. Any of us are free to sell our clunkers on the used car market anytime we want and use the proceeds to buy a newer car.

    This bill will only be of interest to people who happen to own used cars worth a few hundred to possibly a few thousand dollars on the used car market who have the means to buy a new car. It is also a sure bet that new car prices will be rebounding in this short time frame, possibly eating up the voucher advantage.

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