Cash For Clunkers (aka Car Scrap) Scheme is Worthless

The Demopublicans in Congress want to make it so that anyone turning in a used vehicle that meets certain criteria gets paid for doing so. Basically, if you have a rusty POS sitting in your back yard, you can now trade it in at a dealership on a new car and get a pile of cash from the government for doing it.

Sounds great, right? Sure it does. Until you read the fine print.

The requirements appear to be on the up-and-up with the trade-in voucher being worth up to $4,500 depending on the EPA mileage difference between the old car and the new one you're buying. So if there's a 4mpg improvement, you get $3,500 and if there's a 10mpg improvement, you get $4,500.

Here's the problem with that: my Toyota pickup was rated to get 18mpg when new (city). If I turn it in for a Ford Diesel F150, which the EPA rates at 22mpg, I qualify for $3,500. Except my Toyota damn sure puts out less emissions than that diesel.

Now let's look at how vouchers/trade-in programs have worked elsewhere.

Facing dropping sales, the Germans decided to implement a car scrap scheme in January. The world praised them for "looking ahead" and "being green." Except for one thing. The scheme was a big time failure!

It was extremely expensive to implement, worked only for a short amount of time, and the whole thing may result in a longer-term auto-buying slump. Here's why:

The German government will end up dumping nearly 5 billion Euros into the deal this year--much more than anticipated. There was a 40% jump in car sales for a little over a month after the scheme was implemented, but that has since dropped significantly and continues to do so.

Worse, many who took advantage of the deal were probably going to buy a car anyway and some would likely have purchased cars next year, but did so now to take advantage of the scheme. Which means fewer sales next year...

Finally, the UK's Environmental Transport Association ran the numbers and said that the scheme has a huge cost-per-ton in scrappage (recyclables) for the cars, making them run in the red.

The worst part of all this? Many of those cars were likely going to be scrapped as regular recyclables through normal (non-government) channels anyway. Consumers just traded them in instead because the German government was willing to pay much more than a scrap yard would have--for obvious reasons, see the last paragraph.

I kind of like the idea at Yahoo! Green to get rid of old lawnmowers instead. These pollute much more than cars ever will.