Cash for Clunkers is bringing people into dealerships again and that’s a great thing, right? There’s no doubt that it’s a popular program. Now that Congress has approved another $2 billion infusion, shouldn’t we begin to evaluate the program?
The program offers drivers who trade in qualifying vehicles up to a $4,500 credit toward a new, more fuel-efficient car from participating dealers. The government reimburses dealers. The goal is to promote fuel efficiency and stimulate the very weak automotive industry. It comes in the wake of the controversial automotive industry bailout.
It’s unclear who exactly benefits from the program, however. The Washington Post reported that 4 out of 5 cars being bought are foreign made. Top sellers include Ford Focus, Toyota Corolla, Honda Civic, Toyota Prius and Toyota Camry. It’s a shame that Cash for Clunkers isn’t directly helping the American manufacturers who received the government bailouts.
This program’s wasteful elements disturb me most. The program mandates that these clunkers are demolished within 180 days. Why not reuse and recycle? Many of these cars are still drivable and could easily serve someone in need of transportation. There are many in need today. But due to the government mandate, these cars can’t be reused. The government advises that car dealers replace a trade-in’s, now termed a clunker’s, engine oil with a sodium silicate solution. This lethal injection of liquid glass renders the car inoperable. It’s a waste of resources and that speaks volumes about the program’s lack of foresight. Recent videos of a Volvo and a Mercedes being destroyed as part of the program have begun to fuel outrage.
Our 2002 Jeep Liberty would have qualified as a clunker. We opted to sell it to a college student for just $2,000 rather than utilize the Cash for Clunkers program. Our Jeep hasn’t been destroyed. Instead, it’s being used to transport someone to and from his job and classes. Isn’t this a better stimulus program?
Isn’t private enterprise usually better than government management of the economy? I think that a key lesson of change needed by domestic car makers and the auto union was lost in this program.
Another of the effects of the CforC program was that the sales incentives car dealerships usually give during slack times were no longer needed. I think it’s a bad precedent for the normal persuasive side of capitalism. Instead of the dealer sacrificing something to make a sale, he got the taxpayer to do it.