The US House of Representatives just voted to pass a "cash for clunkers" bill that will give consumers a cash rebate for old clunkers. If you live in the US, have the right vehicle to trade, and pick wisely for your new one, then you could save up to US$4,500 for gas-guzzler trade-ins.
The idea is to get people out to buy cars and trucks again, but also improve the US fleet average fuel economy. The US government wants to boost auto sales with a $4 billion cash incentive for fuel-efficient cars and trucks.
The Big Three (maybe better now called the Big One, the Failed One and the Little Italian One), are pleased with the idea even if it does not specifically favor US made products, since they all expect their sales to increase. Many ‘foreign’ vehicles are also made in the US now, like the Toyota Matrix, so it is likely that it will have positive effects on safeguarding auto-manufacturing jobs.
Pete Lawson, vice president of government affairs at Ford Motor Co., explained, "This timely, targeted and temporary program will put money directly in the hands of consumers and work to reduce fuel consumption and greenhouse gas emissions."
The website www.Jalopnik.com explains the rebate program in some detail but basically a passenger vehicle gets a US$3,500 credit if the old vehicle gets less than 18mpg and the new vehicle gets a combined fuel economy 22mpg or better, and costs less than US$45,000. If the difference in fuel consumption is 10mpg then the rebate goes up to US$4,500.
For small trucks and SUVs the new vehicle has to get a combined 18mpg or better, if consumption is 2mpg better the rebate is US$3,500, 5mpg better gets you US$4,500.
For big trucks and vans, US$3,500 rebate for at least 15mpg combined and 1mpg better than the old vehicle, $4,500 if the improvement is 2mpg. Large work trucks get a maximum of $3,500 for models older than 2001.
You also need to have owned the vehicle for at least a year and it has to be roadworthy and is only valid for vehicles built after 1985. All vehicles have to be crushed but parts can be stripped from it, except the actual engine block.
The US is not the only place with rebates. In Germany, the "wreck rebate" scheme has increased auto sales, saving jobs, and removed gas-guzzlers. Ford Germany received tens of thousands of orders for fuel efficient Fiestas, Ka subcompacts, and Fusions.
The rebate is worth around $3,300 to scrap a 9 year old vehicle. A new car generally has much lower CO2 emissions and better fuel economy than a 9 year old one. Though the program is expected to cost billions of dollars, it may be better than direct investment in the car industry since the government gets back the sales tax revenue on vehicles, worker income tax revenue and avoids having to pay unemployment insurance and other social costs.
Other ups and downs of the scheme are keeping the revenue within the USA that normally leaves the country when foreign vehicles are bought and also stimulating one part of the economy normally means other parts are under-funded unless the government wants to run an even larger budget deficit. A limited number of people want, or need, to trade-in their vehicles, so this is a short-term stimulus effect only.
The British government announced a $3,000 rebate for scrapping 10 year old cars, half the rebate comes from the government and half from the auto manufacturer.
Canada already has various scrap-it programs that encourage owners of older vehicles to scrap their vehicles for newer ones, on the premise of improving air quality. The BC provincial program has been removing up to 500 vehicles a month, with rebates from C$750 to C$2,250.
However Canada has yet to implement a scrap-it program as part of an economic stimulus or to help lower overall vehicle emissions/increase the fleet fuel consumption figures and save gasoline. The US plan may now push Canada to do the same.
The Canadian Vehicle Manufacturers' Association that represents Ford, GM and Chrysler, are asking for a 10 year old or older, scrap-it program with at least a $3,000 trade-in. Auto sales are down almost 20% in Canada compared to last year and dealers are also feeling the pinch as buyers stay away from the car lots.
Trevor Williams is a University of Victoria Mechanical Engineering PhD candidate specialising in renewable energy, power grid modelling and plug-in hybrid electric vehicles. He has a bachelors in Aeronautical Engineering, a Masters in Management Science and over 23 years international experience in the space industry, having worked on Earth observation and telecommunications satellites. He is the author of the Eco-Geek blog.
Show/Hide comment form
