I didn't even get a chance to write about the Car Allowance Rebate System (better known as Cash for Clunkers) before the program before news came out last night that today may be the last day of the program. While the program was supposed to run until Nov. 1st, the 1 billion in funding for the rebates were used up in nearly a week. The Cash for Clunkers may be a victim of it's own success.
How Cash for Clunkers works (worked?)
The idea is that you can trade in any car that is less than 25 years old and gets fewer than 18 miles a gallon for a new car that gets at least 22 miles a gallon. The consumer gets an instant rebate between $3,500 and $4,500 (the dealer gets the money straight from the government, so they are on the hook if they don't fill out the paperwork). The trade-in has to have it's engine destroyed to prevent the dealer from turning around and selling the car. In reality, it's a lot more complicated than that, but that's the gist as far as how I understand it.
Am I the only one who finds this completely stupid? Please tell me I'm missing something here. It sounds like someone could be trading in a perfectly functional 10-15 year old car (i.e. little resale value) and get a great deal on a slightly more fuel-efficient car. The thing that gets me is that 17mpg in a functional car isn't that bad. It's useful and that value shouldn't just be destroyed. It just seems wasteful.
I love the idea of transitioning people to more fuel efficient cars, but let's widen the gap some to get people in real fuel efficient cars. (Actually, that's exactly what some law-makers are proposing.) This also has a hint of printing out stimulus checks and giving it to everyone. So the people have more money and are buying more stuff... That money is just more government debt, which means the value of the dollar just went down some more.
How My Cash for Clunkers Would Work
I think we should work towards making one or two super cars. Since, as an American taxpayer, I seem to own a portion of GM (thanks bailouts), hopefully someone is listening (even if they reject my idea). These super cars would get great mileage via plug-in electricity and hybrid technologies. They would be cars that everyone would want to drive. Maybe the upcoming Chevy Volt is the answer to the fuel-efficient question. A car that everyone wants to drive may sound far-fetched, but the Honda Accord has enjoyed that status for some time. I'd go as far as commission Apple to design an iCar to use as a decent starting point. The super cars would also be affordable - especially because we are going to make them in bulk. Finally the super cars must also come in a convertible option... hey it's my idea so I'm going to make that non-negotiable.
Then I'd offer a Cash for Clunkers deal where you trade in your inefficient fuel car and get a good deal on one of these super cars.
What do you think? Is the current idea of destroying working cars the right one? Do you think the Cash for Clunkers program is just a short-term solution to a poor economy that might have economical problems down the road? Or is it the long-term answer we've been looking for?
[Finally, I should mention that the program might only end temporarily while more funds are being allocated. It seems like the government is working at a furious pace to do so (news of this might already be out by the time this article is published).]
23 Responses to “Cash For Clunkers: What’s Your Take?”
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