The long-awaited “Cash for Clunkers” program kicked off today, with most dealers reporting a strong early reaction from potential car buyers. Early this morning, the Department of Transportation website responsible for registering the trade-ins overloaded. “This is the first day for registration, and there were 30,000 dealers around the country trying to get into the system,” DOT spokesman Rae Tyson told The Rochester Democrat And Chronicle.
The success of the program is being closely monitored, as rumors swirl that Congress may try to extend the deal past its November 1 deadline and allocate new money if it shows results. But there are several issues other than sales volume that may deserve consideration as well—some of which you probably haven’t heard before.
1It Will Increase Emissions, Not Decrease Them
“It shows a lack of understanding of ‘sustainability.’ The environmental cost associated with building a new vehicle outweigh the savings associated with increasing your fuel consumption by anything but an astronomically high number (think 150%). So unless people are trading in old Suburbans for Vespas, you’ll be hurting the environment more than helping it. The one benefit we can get behind is the auto industry stimulus that would occur from added sales. However, it would be a one-time hit—not a real solution to the many things that really ail the industry.”
The auto blog Jalopnik, in a January post that was critical of the proposed program.
2There Will Be a “Consumer Backlash”
“(It’s) nothing more than a clever slogan for a program to spend $1 billion of our tax dollars to find a government-subsidized vehicle trade-in to help new car dealers sell cars… Consumers will soon learn that they are simply trading in their vehicles and will still have to jump through all of the hoops to qualify for and purchase a new vehicle.”
Kathleen Schmatz, CEO and president of the Automotive Aftermarket Industry Association, which represents used car suppliers, distributors and retailers. The used car industry expects to suffer as a result of the program.
3There’s a Potential for Fraud
“Substantial opportunity exists for fraudulent diversion of the trade-in vehicle, largely because its still-functioning engine makes it attractive to return the vehicle to the road rather than relegate it to the scrap yard.”
The National Highway Traffic Safety Administration, which is requiring car dealers to disable the engines of clunkers before they’re sent to scrap yards by running an engine-destroying compound through them. Still, the NTSB admits there are likely to be those who attempt to con the system.
4It Won’t Save the Auto Industry
“Retail sales for 2009 are expected to be only incrementally affected by the Cash for Clunkers program, as many consumers don’t understand the specifics of the program, and if they do, they often find they don’t qualify for the incentive.”
Gary Dilts of J.D. Power and Associates in a press release. Many analysts think Cash for Clunkers will cause car buyers to time their purchase around the program, creating few actual new sales.
5It Hurts the Working Poor
“Maybe the new cars will get better mileage. But what about the people who can’t afford to buy a new car? They need transportation. And if they don’t have it, they won’t be able to get to work.”
Roger Penn, whose charity “Car Ministry” fixes up used cars and gives them to single mothers. Penn told NPR that he’s worried that vehicle donations will slow to a crawl during the program and that there will be no used cars affordable or available to people who desperately need them to get to work.
6“Cash For Hummers”
“If you’re cruising around in a gas gulper that gets just 14 miles per gallon, you can receive the money from the government if you were to trade it in for a Hummer H3T pickup, which gets 16 miles per gallon. Federal subsidy. For that.”
Steve Inskeep, co-host of NPR’s Morning Edition.
7Good Vibes for Green Cars
“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.”
Blogger Brian Merchant of TreeHugger.com.