Cash for clunkers: Consumers could get up to $4,500 toward new car

[MuffyBee]

http://www.kvue.com/news/top/stories/061909kvue_cash-for-clunkers-cb.66af9bc.html
Cash for clunkers: Consumers could get up to $4,500 toward new car

10:52 AM CDT on Friday, June 19, 2009
WASHINGTON -- Car shoppers could take advantage of government incentives worth up to $4,500 this summer to send their old gas guzzler to the scrap heap in favor of a more fuel-efficient new vehicle.
 President Barack Obama is expected to sign into law the “cash for clunkers” program, which was approved by the Senate on Thursday. For owners of low-mileage models such as the 1994 Ford Bronco, 1998 Nissan Pathfinder or the 1995 Chevrolet Blazer, the plan could give them a reason to visit their local car dealer during an economic downturn.
<snip>
 The bill provides $1 billion for the auto sales program from July through November and the Congressional Budget Office expects that with a total of $4 billion, about 1 million new vehicles could be purchased. The government is expected to implement the program by early August.

Automakers and their unions have lobbied heavily for the incentives to help the auto industry boost sales and stabilize General Motors Corp. and Chrysler Group LLC, which have received billions of dollars for government-led bankruptcies. In May, U.S.  auto sales were 34 percent lower than a year ago and the industry expects to sell less than 10 million vehicles in the U.S. in 2009, compared to more than 16 million in 2007.

Here’s how the plan works: Car owners could get a voucher worth $3,500 if they traded in a vehicle getting 18 miles per gallon or less for one getting at least 22 mpg. The voucher would grow to $4,500 if the new car’s mileage was 10 mpg higher than the old vehicle. The mpg figures are listed on the car’s window sticker.

Owners of sport utility vehicles, pickup trucks or minivans getting 18 mpg or less could receive a voucher for $3,500 if their new truck or SUV got at least 2 mpg higher than their old vehicle.  The voucher would increase to $4,500 if the mileage of the new truck or SUV was at least 5 mpg higher than the older vehicle.

The program was aimed at replacing older vehicles—built in model year 1984 or later—and would not make financial sense for someone owning a vehicle with a trade-in value greater than $3,500 or $4,500.

A 1998 Jeep Cherokee 4-wheel-drive with about 150,000 miles, for example, might only get $1,000 to $1,500 as a trade-in vehicle, according to estimates by Kelley Blue Book. Since the 1998 Cherokee gets about 17 mpg, an owner could parlay it into a new Ford Escape Hybrid -- 2009 versions get 28-to-32 mpg—and maximize their trade-in to $4,500.

Dealers would apply the vouchers to the purchase or lease of a qualifying vehicle and ensure that the older vehicles are crushed or shredded. The new vehicle must have a manufacturer’s suggested retail price of less than $45,000.

The program is not without critics.

Jeremy Anwyl, chief executive of Edmunds.com, a Web site for car

shoppers, said it would struggle to provide 250,000 new vehicle sales. Most of the qualifying vehicles would be at least 10 years old and many owners would be less inclined to take on a new car payment or unable to afford a new vehicle.

“You’ve got to consider the profile of consumers who drive these vehicles,” Anwyl said.

Budget-conscious Republicans in the Senate opposed it, along with environmental-leaning lawmakers who said it failed to encourage the purchase of high-mileage cars and didn’t apply to used vehicles. Someone could receive a voucher for buying a new Hummer, they noted, pointing to analysts who said it would primarily benefit owners of older-model pickup trucks, SUVs and minivans.

Dealers say it will be a valuable tool to lure more shoppers to their showrooms. Many intend to advertise heavily and combine the government plan with other incentives, providing some help at a time when the industry is struggling to sell cars.

“Anything to jump-start the economy,” said Jason Robinson, a car salesman with AutoServ of Tilton, N.H. “There’s not much sense of urgency out in the market right now.”

[Red]

More pork bailouts with people's hard earned money.

You know when a bill is a terrible one that no one will support?

When politicians add it to a spending bill yo support the troops and the war. Shame on those that added this to a military spending bill.

[MuffyBee]

http://autos.yahoo.com/articles/autos_content_landing_pages/1014/five-reasons-cash-for-clunkers-is-a-joke/;_ylc=X3oDMTE5dnBhMTNuBF9TAzI3MTYxNDkEc2VjA2ZwLXRvZGF5BHNsawNjbHVua2Vycy1qb2tl

Five Reasons “Cash for Clunkers” is a Joke
Why Cash for Clunkers is more a political maneuver than substantive help for the U.S. auto industry—or the environment.
Provided by CarandDriver.com
By Steve Siler • Illustration by Patrick Hoey

With news that Congress has passed its ballyhooed $1 billion “Cash for Clunkers” bill, we feel compelled to voice our skepticism about the program. Here’s the bill in a nutshell: Buyers of new vehicles between July 1 and November 1 will be given a voucher for $3500 if they forfeit a post-1984 car or truck that has been registered for at least one year and has a combined fuel economy rating at least 4 mpg lower than their new vehicle. The voucher grows to $4500 if the increase in fuel economy is 10 mpg or higher. The old car or truck is then crushed and recycled.

Here are five reasons we don’t think this program is worth the time it took to draft it, let alone a billion dollars:

1. The voucher replaces the trade-in deal you might otherwise get from the dealership; it’s not in addition to the car’s private sale or trade-in value. In other words, if you’re trading in a car that’s worth $3000, your net gain is only $500. Although if your car is worth $100, CFC couldn’t come at a better time.

2. We’re not sure how many folks driving cars worth $3500 or less are in the market for a new car in the first place. Sure, there’s the occasional fresh-out-of-college new-hire (we’re not sure who’s hiring right now, but we’ll play make-believe) that might still be ready to move from a Dodge Omni to a shiny new Honda Insight, but people driving cheap old beaters are probably doing so because they can’t afford a new car. And $3500 doesn’t go far when the average transaction price of new cars hovers around $24K. The vouchers don’t apply toward the purchase of used cars, for which the majority of old beaters are traded in.

3. People driving large, gas-gulping old cars and trucks often do so because they need the utility those vehicles provide. Old station wagons, for example, have few modern counterparts that are as versatile while achieving better fuel economy. Ditto pickups, which have gotten bigger and more capable but not much more fuel-efficient. And if the government thinks that someone is going to step out of a 1994 Dodge Ram into a Honda Fit, they need to get out of D.C. a little more often.

4. Naturally, we have some reservations about any bill designed to facilitate wiping out—we’re sorry, recycling—any automotive species. And let’s face it, while there are a lot of bona fide clunkers out there, we’re afraid that a bunch of future classics will get caught in this roundup. We propose, then, that a certified auto enthusiast (paid, of course) be placed at all certified CFC dealerships to screen the cars that are brought in, returning the cool cars—including anything with T-tops—to the streets.

5. Besides cleansing the U.S. of gas-guzzling pigs, the other supposed benefit of the CFC program is to provide a short-term boost to the starving auto business. However, we hope these legislators don’t expect it to meaningfully help the domestic automakers. Many of the automobiles with fuel-economy ratings high enough to qualify for the vouchers come from Japan and Korea.

On the bright side, the cost to taxpayers will be minimal when no one actually participates.