Tag: Clunkers

In the as yet unfinished fight to produce vehicles that are 'green' and have little carbon footprint, our automakers have been encouraged by the administration to produce a slew of not-ready-for-prime-time electric cars that not only cost too much, but go about 40 miles tops, with engines that might be better suited towards kitchen blenders or hand held power tools.  Michigan automakers have really gone to he!! in a hand basket.

I hold nothing against the volt, really.  It serves the purpose of salving eco guilt for some, and might even have a future, but the failed efforts of the government to convince enough buyers through rebates and credits of $7,000.00 are a perfect example of why we do not let government types choose which products are best for us.  The credits failed so miserably, that makers of the Chevy Volt are worried about the expiration of those credits after today.

On Tuesday, the House of Representatives, in their infinite and omnipotent wisdom, passed the "cash for clunkers" bill, aiming to boost new auto sales by giving up to $4,500 in rebates, for turning in gas-guzzlers.

Funny thing is ... even the Detroit Free Press says it won't work:

I admit it. I have not paid any attention to the "cash for clunkers" bill winding its way through the geniuses in Congress. Today, however, I caught the story in the Nick DeLeeuw-designated Ivory Tower about this ridiculous proposal.

Less than a week after it was reported that The One's "economic" program is having the opposite of the intended effect (i.e., instead of rejuvenating the housing market, the massive spending is driving up interest rates and choking off investment), we now have the "cash for clunkers" bill (let's call it CFC), apparently designed to destroy vast segments of the auto market.

Most people hear about CFC and think it's a simple incentive to buy a new car. Not so fast, sparky. Here's how it works -- you take your qualifying car or truck (one that gets less than an EPA combined mileage rating of 18 mph) and take it your nearest dealer (hurry, before they're all gone). Don't worry about negotiating a trade-in allowance for your vehicle -- there won't be one! Why? Because the car or truck you trade in cannot be resold; under CFC, it must be crushed or recycled. In fact, the car or truck traded in becomes . . . wait for it . . . property of the federal government! Here's the language from the bill itself:

For each eligible trade-in vehicle surrendered to a dealer under the Program, the dealer shall certify to the Secretary [of Transportation], in such manner as the Secretary shall prescribe by rule, that the dealer--

(i) will arrange for the vehicle's title to be transferred to the United States and will accept possession of the vehicle on behalf of the United States;
(ii) has not and will not sell, lease, exchange, or otherwise dispose of the vehicle for use as an automobile in the United States or in any other country; and
(iii) will transfer, on behalf of the United States, the vehicle (including the engine block) and the vehicle's title, in such manner as the Secretary prescribes, to an entity that will ensure that the vehicle--

(I) will be crushed or shredded within such period and in such manner as the Secretary prescribes; and
(II) has not been, and will not be, sold, leased, exchanged, or otherwise disposed of for use as an automobile in the United States or in any other country.

The government incentive is not all it seems to be -- if you have an old car worth $4,500, trade it in on a new car, and get a $4,500 incentive, you are no better off than you were before. If your vehicle is worth more than the incentive, you are worse off, and it makes more sense to keep the vehicle.

So, the supply of used cars will be strangled. What are teenagers supposed to drive?

Goodbye, used car market. Goodbye, auto parts stores. Goodbye, after-market parts and accessories manufacturers.

Goodbye, common sense -- we look forward to your return, but we will continue to suffer through your absence.