Obama's Auto Pitch: Crush Those Clunkers

Unveiling his far-reaching auto plan, President Obama gave a nod to a little-noticed movement in Congress to clear the roads of gas-guzzling clunkers best destined for the crusher.

It's an attractive idea. Think of it as: "Get the Jalopies off the Road."

The theory is simple enough: Reward owners for junking older-model fuel-slurping cars and light trucks and buying new "clean" vehicles that will use less fuel and release less carbon, the key culprit in global warming.

If done right, it delivers two benefits central to the president's goals. It would stimulate the sale of new vehicles and help fight global warming and other air pollution. If done poorly, it helps sell vehicles that are only minimally more efficient than the ones that are being scrapped.

Here are the options:

• The better way, which is more likely to achieve the environmental goal, rewards purchasers of new vehicles that are 25% more efficient than comparable cars and light trucks, if they are replacing vehicles that originally got 18 miles per gallon or worse. General Motors, Chrysler and Ford make at least one model that would be eligible. The primary sponsors are two Democrats, Reps. Steve Israel of New York and Jay Inslee of Washington State.
• The worse way -- aimed at simply selling more cars under the guise of clean air -- would provide a slightly more valuable incentive for replacing the inefficient vehicle with one that is only marginally more efficient. More than half of the cars in showrooms today meet the fuel economy levels set by the bill, so it would yield little environmental benefit. It is sponsored by Rep. Betty Sutton, an Ohio Democrat.

What do we get for our money?

With the Israel-Inslee bill, we get more efficient cars that cut the nation's oil addiction and global warming, while encouraging the American auto industry to compete more with foreign manufacturers. With the Sutton measure, we are putting on the road vehicles that are only slightly more efficient than the ones that are scrapped.

The first would save America 16.8 million barrels of oil a year, cutting carbon dioxide pollution by 9.8 million tons. The second? It is unclear whether it would bring about any meaningful oil or carbon reduction.

The Israel-Inslee proposal would encourage the driver of a seven-year-old SUV getting perhaps 14 mpg to scrap it and use the $4,500 voucher the bill would provide to buy, say, a 32 mpg Ford Escape hybrid.

Sutton's would allow a driver to junk a vehicle getting, say, 25 mpg and use the $4,000 voucher to buy one getting 27 mpg, as long as it was built in the United States.

Presenting his overall auto plan on Monday, Obama noted that "such fleet modernization programs, which provide a generous credit to consumers who turn in old, less fuel-efficient cars and purchase cleaner cars, have been successful in boosting auto sales in a number of European countries."

Without driving into the legislative weeds, it is easy to see that Obama has the opportunity to choose a twofer. Both bills will help Detroit sell cars. But only the Israel-Inslee bill will also help cut greenhouse gases.

That's a honey of a deal for Detroit, the country and the environment.

Comments

[sc300nc]

This is Obama's remake of GM, they only way GM is going to survive is to dictate to us adoring taxpayers what kind of cars we need to buy. Doesn't matter what we want, they will decide that for us.

I agree, the clunkers will end up in Juarez, Tijiuana, or some other central american city, getting even less maintenance and contributing even more pollution.

[isis]

I hope this happens. We have an old work truck gas guzzler and I would like to kick it to the curb but just can't quite afford to.

[ImmanuelGoldstein]

Sorry but I'm one of those systemic thinking kind of guys. How long would it take for the energy savings for the more fuel efficient car to equal the energy cost of making it?
Of course this will increase support for mass transit because this plan will push pretty much everyone in the lower half of the income scale off the roads because even with this giveaway they can't afford to go out and buy a new $20,000 ICE vehicle , a $30000+ hybrid or a electric car which will certainly be over $50000.

[SelenicMagick]

It is class warfare ... plain and simple.

[KillTheMessenger]

"Sorry but I'm one of those systemic thinking kind of guys. How long would it take for the energy savings for the more fuel efficient car to equal the energy cost of making it?"

No more than a couple of years. You don't have to make the whole car with the energy savings, only the parts that make it more energy efficient. In case of a Prius that means you replace a complicated mechanical transmission with a simpler electromechanical one. I would estimate the cost of the electric engines is no more than a thousand dollars in total. The batteries are only expensive because they are being sold at a premium over material cost right now. The basic chemistry is not particularly costly (neither in dollars not kWh). The control electronics is cheap, a couple hundred dollars BOM. Way less than, say, your computer.

Mass transit and cars are orthogonal means of transportation. You can't replace one with the other. Nobody in their right mind tries to, by the way. Mass transportation in large cities (Tokio, London, New York) is a necessity. In smaller communities (like many European towns with 100,000 citizens) it's a convenience and means to increase quality of life. People still have cars. They are just smaller and they aren't being driven as much and as far.

[LeonBNJ]

What might be a better approach is to 1) have strict and uniform safety and pollution inspection standards throughout the USA; 2) registration/ car taxes based progressively on fuel consumption/ pollution rates - some European countries are doing or proposing this and 3) a 'recycling tax' on all new cars sold in the USA, perhaps of $300, placed in an interest bearing fund, with a pay out when the car is scrapped.
The inspection regimine would move off the roads highly polluting and less safe cars when they got older as their value would substantually reduced as costs to keep on the road would increase beyond there selling prices. Progressive rate registration fees/car taxes, with relatively low rates for pure electric cars to rates of perhaps $1000-2000 /year for high polluting - high CO2 emmiting and low milege vehicles would discourage purchase of new and used of the higher polluting models. Most true commercial use vehicles would pay lower rates recognizing the need by their appropiate users. The recycling tax would encourage the last road user of a car to scrap it rather than keep it running.

[itolduso]

Those dealers will just take those trade-ins and ship them to Mexico, Central, & South America, even if they've got to dismantle them and ship them as 'parts'- those vehicles will still be on a road somewhere. This just looks like an attempt to slow down efforts toward MANDATING tougher fuel efficiency - claiming car makers will WANT to build more fuel efficient vehicles..­.all they need is "encouragement" to compete with foreign auto makers. How many more times are we gonna dance to that tune?

[KillTheMessenger]

Itolduso..­. people in Mexico and Central America can not afford the gasoline for the US guzzlers, even if they could afford the cars.

[mjt218]

So I'm missing out on tax credits for new vehicles because I responsibly didn't buy a hemi V8 supercharged all-wheel drive Texas Edition truck?

[customgreen]

Well here is the thing. I did buy a 4 x 4 Hemi Quad cab. Guess what, I need it for my work. I need a very powerful truck that can tow heavy loads, that can carry more than two people and is reliable. My truck is 5 years old has 155,000 on it. Never had one single problem with it. So the President and a slew of short thinkers wants to tell me what I can and can't buy. Junk my truck, get a small voucher to buy a new. less powerful more costly slightly better fuel efficient truck. My ability to do my work efficiently will suffer, I will pile on new debt (my truck is paid for) Makes no sense, is a foolish thing for someone in my position. Not everyone bought their cars or trucks out of ego. The last thing I want is some ugly ass Euro-blob with no distinction. Todays cars are about as ugly as they could possibly be. Oh yeah, and incredibly small. I am 6'3" tall and for the life of me I can't hardly squeeze into one of those McNuggets.

[KillTheMessenger]

Nobody needs a 4x4 Hemi Quad cab truck. You maybe like yours but you don't need it. If you need to tow heavy loads a lower speed, higher torque, more fuel efficient commercial truck would be far better. That's how the rest of the world does it.

A commercial truck that has to tow two shipping containers in Europe has a 380hp diesel engine. That's the only truck that even comes close to that kind of power. A usual contractor truck is 120-140hp, at most. And in Asia a lot of work gets done with small 60hp trucks.