Cash for Clunkers Passes - Auto Industry Saved? Blue Skies Ahead?

cash for clunkers passes photo

Photo via Alice Springs

There's plenty of debate as to whether there's anything green about the Cash for Clunkers program that just passed the Senate, and is on the way to the White House to be signed into law. The law will allow owners of "clunkers", or old, emissions-spewing vehicles, to receive up to $4,500 when they trade it in for a new, more fuel efficient vehicle. The bill will allegedly curb emissions while boosting the auto industry. But will it work?Depends on which goal you're considering when you ask. The law is billed as green because it's predicated on getting people to drive cleaner, more fuel efficient cars; which will theoretically reduce the emissions of the cars on the road. But it fails to take a few factors into consideration on the green front, like whether it will be encouraging people to buy brand new cars when their current model still runs fine, "clunker" though it may qualify to be, and the amount of pollution it will take to build all such new cars to meet the increased demand.

Add to that the fact that the fuel efficiency improvements one must meet to get the discount are pretty weak, and you've got yourself one barely green bill. See for yourself, via Bloomberg:

Consumers will get $4,500 vouchers if the new car they are buying gets 10 miles-a-gallon better gas mileage than the model they are trading in. For light trucks, the improvement must be 5 mpg better than the older model, and for large light trucks, 2 mpg.

Yes, you can get a $4,500 discount for getting a new truck that's only 2 mpg more efficient than your old one. Still, an estimated 75% of car emissions come from the oldest, nastiest, clunker-iest models out there--the bill could nonetheless cut off some of those emissions.

So if the bill's not exactly green, will it achieve it's other, and, let's be honest here, primary goal; which is of course to bolster sales for the dreadfully slumping auto industry? Again, many think no. Again, from Bloomberg:

Consumers may not be as interested in the program as they expect once they read "the fine print," said Jeremy Anwyl, chief executive officer of research firm in Santa Monica, California.

If the value of their used car is greater than the $3,500 or $4,500 voucher, it wouldn't make financial sense for consumers to do a trade-in for the discount, Anwyl said.

That means that you'd have to both have a running car worth less that 4 grand or so, and also be in the market for a brand new, more fuel efficient vehicle. Though there are certainly people out there who fit that bill, but it seems to be aimed at the more affluent--lower income people who buy their 'new' cars used may be left out in the cold.

One positive effect the bill could have, though, is simply to further advance the presence of "fuel efficiency" as a reward term in the skeptical American consumer market. Yes, hybrids continue to sell, but not to 99% of the population. The bill could, albeit in a relatively minor way, serve to advance an attitude that places importance on fuel efficiency in the future.

More on Cash for Clunkers
"Cash for Clunkers" Gets Green Light In House Committee
Obama Favors Clunkers for Cash

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