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  • Cash for Clunkers by the Numbers

    Ken Belson of the New York Times provides some interesting data points on the cash for clunkers program:

    The “cash for clunkers” program introduced last week appears to have been a success, at least based on the tens of thousands of consumers who streamed into their local car dealers to swap their beaters for new, more fuel-efficient replacements.

    But there is more to the numbers than the headlines. According to a survey of car dealerships and 2,200 consumers by CNW Research, the average fuel economy of vehicles traded in last week was 16.3 miles per than the 18 m.p.g. needed to qualify for a government rebate of $3,500.

    The relatively small differential suggests that consumers have not been turning in the oldest, dirtiest and least fuel-efficient cars, but instead have been getting rid of their second and third cars, according to Art Spinella, who ran the survey.

    “These are third cars used for kids in school,” Mr. Spinella said.

    The vehicles that consumers bought with their credits had average fuel efficiency ratings of 24.8 miles a gallon, he said.

    Lawmakers hoped the “cash for clunkers” program, formally known as the Car Allowance Rebate System, would reduce America’s dependence on imported oil. But the early results of the program suggest that may not happen. The vehicles turned in were driven about 6,000 miles a year, he said. If the new vehicles are driven about 12,000 miles a year, the rough annual average, then consumers will actually use more fuel, not less.

    “The energy independence argument did not ring true, at least so far,” Mr. Spinella said.

    He added that the average annual income of those who bought cars with their rebates was $57,700, just under the $61,000 for all new car buyers these days. That suggests that consumers with the lowest incomes who, in theory, need the rebates most, are not benefiting from the program.

    One of the problems, Mr. Spinella said, is that even a $4,500 rebate may not be enough to persuade consumers to turn in their cars, particularly if they are unable to borrow from cautious auto dealers.

    “Some of the folks who drive a beater all the time are unlikely to get a new car loan,” he said. “That’s one of the problems with the program.”

    Posted in Economics [slideshow_deploy]

    11 Responses to Cash for Clunkers by the Numbers

    1. Steve M, Michigan says:

      So once again, the GOV has taken money from the contributing tax payers pocket and spread it around. Question, how much energy is being used to reduce these vehicles into small ribbons of scrap metal. What then happens to the price at the scrap yard for iron, aluminum, glass, and other "scrap" metals that people routinely recycle for extra cash? How much energy is used in producing a new car versus maintaining a previously produced, running vehicle? What then happens to the average price of used cars that are the only transportation a lower income person can afford with all these used cars being turned into scrap? How many days until the 2010 election? I bet the libs only know the answer to the last question.

    2. dennis says:

      There's another problem with this program: we have no moneyto pay for it!!

    3. terry p england Wich says:

      I suspect the distruction of the trade in vehicles,they should be loaded on ships and give to mexico,or any third world country.

    4. terry p england Wich says:

      I believe that Obama's health care program should be headed for the rocks,it does not benefit the majority of the citizens and for sure it is not going to benefit the social security and medicare programs.

      I have seen how democrats make decisions on cutting costs on programs to support knew programs and its usually a disaster to the taxpowers,because they add on the so called sin taxs,cigarettes,booze,let gas at the pumps go high,but lets be honest,they want to get their fingers in the Social Security and Medicare pie,they cannot resist trying to raid a funded program. I think the congress,president,any government employees,should have the privilage of Social Security,Medicare instead of the lucritive health care,retirement programs they can look fwd to and usually you don't have to spend twenty years to take advantage of them.

    5. terry p england Wich says:

      We have been subjected to constant bombardment by the democratic controlled congress on Gitmo Bay prison. I honestly believe that we should recondition Alcatraz and move the prisoners there,this should satisfy all the bleeding hearts in the Frisco Bay area and I believe it is still designated a federal prison but inactive,the expense to the tax payer would be a lot less than scattering them all over the country or building new facilities. The defense attornys would love the ride across the bay to speak with their clients.

    6. AnthonyB - Tracy, CA says:

      "the average fuel economy of vehicles traded in last week was 16.3 miles per than the 18 m.p.g. needed to qualify for a government rebate of $3,500."

      I'm confused – outside of a missing word or poor grammar. If people are trading in cars that are "below" the maximum trade-in mpg, isn't that a "good" thing? The article makes it out to be not a good thing.

      I'm not a supporter of the CFC program – so with incoherent support like this I guess I don't have to worry about it much.

    7. Bobbie Jay says:

      The government shoves recycling down our throats, yet they destroy functioning vehicles to destroy any need for American, natural resources.

      While destroying these functioning vehicles, how much pollution are these hypocrites allowing to be emitted? And under what regulations? The minds of the people being wasted on unproductive, government jobs!

    8. Sike, NY says:

      I read where Michigan submitted the most claims for 'cash for clunkers' boondoggle ($44 mil)… I thought that Michigan also has the highest numbers of unemployed workers… Something smells a little fishy here… should this fishy stuff be submitted to flag@whitehouse.gov???

    9. Steve, Washington DC says:

      If they are getting rid of the third car, like student cars with lower than average miles per year, the fuel savings is not worth the expense and the energy used to make the cars may outweigh any environmental benefits.

      Also, considering that these vehicles must be in running condition, they have a positive economic value, which means that the rebate is worth something less than $4,500 to the car-buying consumer. Therefore, benefits to consumers must be less then the cost to taxpayers.

      These are among the points the American Consumer Institute made in our piece too. This plan is neither good for the economy or the environment — see: http://www.theamericanconsumer.org/2009/06/30/cas… to read our entire piece.

    10. Megan Fisher, Albuqu says:

      I work hard, earning $14/hour, and have saved up for a good car, a Ford Focus, which I have just paid off. Now I'm paying, thru my taxes, a contribution to my neighbor's purchase? Who earns at least twice what I earn? Moreover, they are destroying some perfectly good cars. So how will my teenager afford a used car when he's ready – the price will go up due to lack of used cars. We are getting screwed TWICE on this give-a-way.

    11. Pingback: Morning Bell: A Clunker of a Stimulus | Conservative Principles Now

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