Who Benefits from the CARS Program?

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SUMMARY

The CARS program, also known as "Cash for Clunkers," was designed to stimulate the auto industry by incentivizing consumers to trade in older, less fuel-efficient vehicles for new, more efficient models. The program quickly exhausted its initial $1 billion funding within a week, leading Congress to approve an additional $2 billion to meet overwhelming demand. While the program has successfully boosted auto sales and reduced the number of gas-guzzling vehicles on the road, concerns remain about its long-term economic impact and the potential for inflated prices in the used car market.

PREREQUISITES
  • Understanding of the CARS program mechanics and eligibility requirements
  • Familiarity with economic stimulus measures and their effects on markets
  • Knowledge of vehicle emissions standards and compliance regulations
  • Awareness of the automotive industry's economic indicators
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  • Research the economic impact of the CARS program on the automotive industry
  • Explore the long-term effects of similar stimulus programs in other countries
  • Analyze the implications of vehicle scrappage policies on environmental sustainability
  • Investigate consumer behavior trends related to government incentives for vehicle purchases
USEFUL FOR

Economists, automotive industry professionals, policymakers, and consumers interested in understanding the implications of government stimulus programs on the economy and the automotive market.

  • #91
Neither has the "historically delusional logic and fraudulent claims of "
It was a light hearted aside.
 
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  • #92
Ivan Seeking said:
Why do so many people on the right think the Iraqi people are more important than Americans? Apparently this is the case. The only spending favored is spending for wars [and one we didn't even need to fight].
Save that thought. The next time someone proposes a tax cut to let Americans keep more of their own money come back here and dig it up.
 
  • #93
Ivan Seeking said:
Why do so many people on the right think the Iraqi people are more important than Americans? Apparently this is the case.
Ivan, the forum rules can be found here: https://www.physicsforums.com/showthread.php?t=113181

Is there a single one of them that you don't violate blatantly and regularly?
 
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  • #94
Ivan Seeking said:
What is the value of ending our reliance on foreign oil? How much do we spend on the military to protect our oil interests? The benefits from this cars program is manyfold.

This is not just a bailout because it pays back in reduced oil imports and it helps to improve the US position globally. The less we need foreign oil, the greater our latitude of options.
I doubt anybody has a problem with reducing our dependence on foreign oil or are rate of emissions. I think people have a problem with taking a page from P. Diddy and deciding we could solve our problems without thinking just by throwing a lot of money at it. Scientist seem to agree that this is not the best dollar for dollar way to reduce emissions. It seems this is just a bailout wrapped around an emission saving premise that gives a select group of taxpayers (really another tax break)money back, I rarely condone a tax cut but if you just want to put money back in peoples hand just give them another tax break and if youare worried about emissions then don't give them a tax break and use that money in a better dollar for dollar way of reducing emissions.

But some energy experts say the country is overpaying for the pollution reductions, mostly because cash for clunkers is more about stimulating the economy than cutting pollution.

Paying up to $4,500 per clunker means the government is spending more than $160 for every ton of carbon dioxide removed over 10 years, said MIT's Jacoby, co-author of the book "Transportation in a Climate-Constrained World."

That's five to 10 times more than the estimated per-ton cost of carbon dioxide for power plants in the cap-and-trade system passed earlier this year by the House.
http://www.msnbc.msn.com/id/32290028/ns/us_news-environment/page/2/
 
  • #95
mgb_phys said:
According to the website Autobytel.com - who have a search page for 'does my car qualify for a trade in' the most searched for vehicles are:

Ford F-Series
Ford Explorer
Chevrolet C/K/Silverado
Jeep Grand Cherokee
Dodge Ram
Chevrolet Blazer
Jeep Cherokee
Dodge Grand Caravan
Dodge Dakota
Ford Ranger

Of course - this doesn't mean people aren't replacing them with the equivalent new SUV/pickup, but it does suggest that people are getting rid of large vehicles rather than just trading in real 20 year old clunkers.

http://content.usatoday.com/communities/driveon/post/2009/07/68495642/1
Here's actual vehicles-sold count from Edmunds (via CNN):
1 Ford Escape (4WD SUV hybrid)
2 Ford Focus (sedan)
3 Jeep Patriot (4WD SUV)
4 Dodge Caliber (4WD)
5 Ford F-150 (4WD Truck)
6 Honda Civic (sedan)
7 Chevrolet Silverado (4WD Truck)
8 Chevrolet Cobalt
9 Toyota Corolla (sedan)
10 Ford Fusion (4WD hybrid)
http://money.cnn.com/2009/08/07/autos/cash_for_clunkers_sales/index.htm

Note this list differs substantially from the one offered by the government, presumably because the government list counted the sub-models as different vehicles (i.e. Focus S, Focus SE, Focus SEL, etc)
 
  • #96
The CARS program is absolutely idiotic:

1) We are taking perfectly drivable cars, that work perfectly fine, and DESTROYING them and turning them into scrap for the benefit of new car dealers...

2) We are mostly purchasing foreign cars with these incentives.

3) We are piling more debt onto a consumer already crushed by debt... and taking cars that are already payed off, destroying them, taking money from ourselves and giving people money to buy new cars...

4) We are hurting the used car market SIGNIFICANTLY as cars are being DESTROYED rather than sold.. and auction prices for used cars are going up to reflect this...

5) With the amount of debt and issues the economy has now, we need to drive our cars until the engines fall out...

End of Story...
 
  • #97
bleedblue1234 said:
...
2) We are mostly purchasing foreign cars with these incentives.
Do you have any reference for that claim? I believe the reverse is true given the Edmunds list.
 
  • #98
mheslep said:
Do you have any reference for that claim? I believe the reverse is true given the Edmunds list.
Foreign makes, not foreign cars.
CSM said:
CARS vouchers in Week 1 helped consumers buy 184,304 new vehicles, more than half of which were foreign makes, mainly Toyota, Honda, Nissan, and Hyundai, according to the US Department of Transportation.

Of those foreign cars and trucks, more than half are made in the US. Best sellers include the Toyota Corolla, the Ford Focus, the Honda Civic, and Toyota’s Prius and Camry.
http://features.csmonitor.com/politics/2009/08/07/cash-for-clunkers-is-popular-but-is-it-truly-a-us-stimulus/"
 
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  • #99
jimmysnyder said:
Foreign makes, not foreign cars.

http://features.csmonitor.com/politics/2009/08/07/cash-for-clunkers-is-popular-but-is-it-truly-a-us-stimulus/"
As I indicated above, the DOT count (used in your CSM reference) is misleading. Toyota is not in the top five of the clunker replacements. Most of the replacement cars are domestic makes per Edmunds.
 
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  • #100
mheslep said:
Do you have any reference for that claim? I believe the reverse is true given the Edmunds list.

mheslep said:
As I indicated above, the DOT count (used in your CSM reference) is misleading. Toyota is not in the top five of the clunker replacements. Most of the replacement cars are domestic makes per Edmunds.
You asked for a reference and you got a reference. What is the Edmunds list? Are you referring to the autobytel list? Why do you think the DOT count is misleading? Are their figures incorrect?

The question is not "Which particular model is the most popular", it is "Are more US makes sold, or more foreign makes.". It turns out that foreign makes comprise 55% of the market in general and it should come as no surprise that they would comprise 55% of the C4C program.
http://online.wsj.com/mdc/public/page/2_3022-autosales.html"

Actually, the question is "are more us cars sold, or foreign cars". The answer is US cars since the foreign makes are built here.
 
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  • #101
jimmysnyder said:
You asked for a reference and you got a reference.
Yes, though we don't know what bleedblue based his claim upon.
What is the Edmunds list?
As posted above. Edmunds tallied up the sales of clunker replacements, reported here by CNN Money
http://money.cnn.com/2009/08/07/autos/cash_for_clunkers_sales/index.htm"
The top 10 rankings they show come from Edmunds. Three days prior CNN Money posted the DOT list:
http://money.cnn.com/2009/08/04/autos/cash_for_clunkers_cars/index.htm?postversion=2009080515"

Are you referring to the autobytel list?
No
Why do you think the DOT count is misleading? Are their figures incorrect?
As posted above, they (DoT) apparently subdivided their count by model variation, so that, e.g., the two full size trucks listed by Edmonds don't even appear on the DOT list. The Money CNN article explains further.

The question is not "Which particular model is the most popular",
Agreed.
it is "Are more US makes sold, or more foreign makes.".
Agreed

It turns out that foreign makes comprise 55% of the market in general
True

and it should come as no surprise that they would comprise 55% of the C4C program.
It turns out they do not, not even close per Edmunds. C4C has mostly been domestic, and largely SUVs and trucks.
 
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  • #102
mheslep said:
It turns out they (foreign makes) do not (comprise 55% of the C4C market), not even close per Edmunds. C4C has mostly been domestic, and largely SUVs and trucks.
CNN said:
While critics had feared that car shoppers would use the program mostly to buy trucks, in fact 83% of the vehicles traded in have been trucks and SUVs while 60% of vehicles purchased were passenger cars, according to Secretary of Transportation Ray LaHood.
This is from the link you posted. I think you read it wrong. I didn't see anything in either of the links you posted that would help answer the question at hand, foreign vs domestic.
 
  • #103
Unless I missunderstood the story, the autobytel data was people searching if their TRADE-IN car qualified. So the data seems to suggest that the majority of people are looking to get rid of their SUV/pickup.
Of course it doesn't mean they didn't go out and buy a new version of the same SUV/Pickup that gets 1mpg more.
It may also be that people trading in a 20 year old Buick didn't go online to look it up because 20year old clunker driver != web user, or because it was obvious that it qualified and people were only researching edge cases.
 
  • #104
jimmysnyder said:
This is from the link you posted. I think you read it wrong.
No, that quote is from the August 5th article which is based upon the DoT list. Three days later in the August 8th article they challenge all the conclusions of the DoT list, based on the Edmunds list.

I didn't see anything in either of the links you posted that would help answer the question at hand, foreign vs domestic.
We certainly have help, just not proof. We don't know what the sales distribution looks like for, say, #11 through #50. But given there are only two foreign makes in the top 10, the odds favor a majority domestic source for C4C.
 
  • #105
mheslep said:
No, that quote is from the August 5th article which is based upon the DoT list. Three days later in the August 8th article they challenge all the conclusions of the DoT list, based on the Edmunds list.

We certainly have help, just not proof. We don't know what the sales distribution looks like for, say, #11 through #50. But given there are only two foreign makes in the top 10, the odds favor a majority domestic source for C4C.
I have posted a reference for the case that more cars of foreign make were sold under the Cash for Clunkers program than domestic. You have posted no such link to support your case. Please don't drag this out. Wait until you have such a link and then post it. Thanks.
 
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  • #106
Let me just report in case this got buried..

The CARS program is absolutely idiotic:

1) We are taking perfectly drivable cars, that work perfectly fine, and DESTROYING them and turning them into scrap for the benefit of new car dealers...

2) We are mostly purchasing foreign cars with these incentives.

3) We are piling more debt onto a consumer already crushed by debt... and taking cars that are already payed off, destroying them, taking money from ourselves and giving people money to buy new cars...

4) We are hurting the used car market SIGNIFICANTLY as cars are being DESTROYED rather than sold.. and auction prices for used cars are going up to reflect this...

5) With the amount of debt and issues the economy has now, we need to drive our cars until the engines fall out...

End of Story...
 
  • #107
bleedblue1234 said:
1) We are taking perfectly drivable cars, that work perfectly fine, and DESTROYING them and turning them into scrap for the benefit of new car dealers...
Car dealers are people too. And all that money eventually flows back into the economy, polyester suits and cheap cologne don't grow on trees.
2) We are mostly purchasing foreign cars with these incentives.
Most of them are built in the USA - Germany and Japan need somewhere with a cheap disposable work force. And anyway the German and Japanese car makers are public companies so Wall St investors can buy shares in them. Would you rather your pension was invested in VW or GM? By not buying a Porsche you risk the life savings of little old ladies.
3) We are piling more debt onto a consumer already crushed by debt... and taking cars that are already payed off, destroying them, taking money from ourselves and giving people money to buy new cars...
Thats Capitalism baby
4) We are hurting the used car market SIGNIFICANTLY as cars are being DESTROYED rather than sold.. and auction prices for used cars are going up to reflect this...
See, a success (and you wondered why economics was called the dismal science)
5) With the amount of debt and issues the economy has now, we need to drive our cars until the engines fall out...
Like Volvo - do you really want America to be more like Sweden ?
 
  • #108
mgb_phys said:
bleedblue1234 said:
1) We are taking perfectly drivable cars, that work perfectly fine, and DESTROYING them and turning them into scrap for the benefit of new car dealers...
Car dealers are people too. And all that money eventually flows back into the economy, polyester suits and cheap cologne don't grow on trees.
The broken glass theory of economics, again?
 
  • #109
mgb_phys said:
See, a success (and you wondered why economics was called the dismal science)
A success by pricing some people out of the used car market?
 
  • #110
bleedblue1234 said:
Let me just report in case this got buried..

The CARS program is absolutely idiotic:

1) We are taking perfectly drivable cars, that work perfectly fine, and DESTROYING them and turning them into scrap for the benefit of new car dealers...
Perfectly drivable cars that get crappy gas mileage and aren't worth that much.
I think the buyers are benefiting also.
4) We are hurting the used car market SIGNIFICANTLY as cars are being DESTROYED rather than sold.. and auction prices for used cars are going up to reflect this...
Let's see. What's going to be left? Used cars that get good gas mileage, and used cars that get crappy gas mileage worth more than $4500.
5) With the amount of debt and issues the economy has now, we need to drive our cars until the engines fall out...
If not for a similar program, I'd have driven my ebola infected car forever. It leaked from every orifice imaginable. It took me a week before I got out of the habit of looking in the rear view mirror every time I stepped on the gas to see how much smoke I was generating.
End of Story...
Not so fast... My new truck is actually getting better mileage in the city than the epa says it should get on the highway, which is 40% better than the car I traded in.

Although it was Ford that gave me the $5000 rebate and $50 for old Ebola, the effect was the same as this program.

I actually thanked the dealership for not making me pay them to take my old car as a trade-in.
 
  • #111
OmCheeto said:
Perfectly drivable cars that get crappy gas mileage and aren't worth that much.
I think the buyers are benefiting also.

Let's see. What's going to be left? Used cars that get good gas mileage, and used cars that get crappy gas mileage worth more than $4500.

If not for a similar program, I'd have driven my ebola infected car forever. It leaked from every orifice imaginable. It took me a week before I got out of the habit of looking in the rear view mirror every time I stepped on the gas to see how much smoke I was generating.

Not so fast... My new truck is actually getting better mileage in the city than the epa says it should get on the highway, which is 40% better than the car I traded in.

Although it was Ford that gave me the $5000 rebate and $50 for old Ebola, the effect was the same as this program.

I actually thanked the dealership for not making me pay them to take my old car as a trade-in.


A) Maybe it is a good incentive for you.. but at best it pushes a little bit of car sales at the cost of a debt riddled consumer (on the average) and more federal dollars at a huge waste to comparable programs...

"As a carbon dioxide policy, this is a terribly wasteful thing to do," said Henry Jacoby, a professor of management and codirector of the MIT Joint Program on the Science and Policy of Global Change. "The amount of carbon you are saving per federal expenditure is very, very small."

B) The US needs to save all of the money it can... we should not be artificially stimulating car sales by destroying perfectly drivable cars... it is like during the depression years when the government was destroying perfectly good corn so that they could raise prices for the farmers... its what governments do best... stupid things...

C) The US cannot afford to be wasting any money right now... the government is running $2,000,000,000,000 deficits (incidentally FOUR TIMES the Bush years deficits- not that he wasn't a terrible president) and we need to ensure that for the safety of our future, our kids future, and the future of the US dollar and the economy, that we be fiscally responsible...
 
  • #112
http://abcnews.go.com/Politics/wireStory?id=8316625
They can also buy versions of the 2009 Lexus RX 350 or 2009 Lincoln MKX, both pricey five-passenger utility vehicles that get about 19 mpg and are capable of towing a small boat...Even a high-end 2009 BMW X3 crossover utility vehicle, priced at just under $40,000, counts as a gas saver eligible under the government program, with 19 mpg.
 
  • #113
bleedblue1234 said:
A) Maybe it is a good incentive for you.. but at best it pushes a little bit of car sales at the cost of a debt riddled consumer (on the average) and more federal dollars at a huge waste to comparable programs...
I disagree. As I've said before, it will take only 2 years for the 3 billion dollars to be recouped in fuel savings. In 4 years, another 3 billion dollars will be flowing through the economy. Also, the cars should all be paid off by then, which means everyone who bought a car due to the CARS program should have a spare $250-$1000 to pump back into the economy each month.
B) The US needs to save all of the money it can...
I disagree. Saving money is the wrong thing to do right now. Fuzzyfelts husband said so. And I trust https://www.physicsforums.com/member.php?u=23973".

we should not be artificially stimulating car sales by destroying perfectly drivable cars... it is like during the depression years when the government was destroying perfectly good corn so that they could raise prices for the farmers... its what governments do best... stupid things...
I disagree. I'm not sure what universe you live in, but where I'm from, http://carbonfreeeconomy.com/wp-content/uploads/2008/12/chevy-volt-concept-07.jpg" , not 18 or less. I say crush them all.

C) The US cannot afford to be wasting any money right now... the government is running $2,000,000,000,000 deficits (incidentally FOUR TIMES the Bush years deficits- not that he wasn't a terrible president) and we need to ensure that for the safety of our future, our kids future, and the future of the US dollar and the economy, that we be fiscally responsible...

I disagree. And you make it sound like Obama is responsible for the $2 trillion dollar deficit. http://www.propublica.org/special/government-bailouts" , if the money hadn't been spent, we'd probably all be working in poor farms and standing in food lines right now.(Ok. I made that up. He said; "But without this help, the downturn would be even more severe")

But this is why I simply adore the CARS program. It's penny ante compared to the TARP and other bailouts. And we get something tangible for it: Shiny new cars! Which might take our minds off the fact that http://abcnews.go.com/Business/wireStory?id=8211048" .
 
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  • #115
OmCheeto said:
I disagree. As I've said before, it will take only 2 years for the 3 billion dollars to be recouped in fuel savings. In 4 years, another 3 billion dollars will be flowing through the economy. Also, the cars should all be paid off by then, which means everyone who bought a car due to the CARS program should have a spare $250-$1000 to pump back into the economy each month.
You skipped some steps OmCheeto. You can't claim the fuel savings came from just the ~$4000 federal buy out. Someone had to go and buy a new ~$20k to $30k car to get the fuel savings, so a great deal more than $3 billion is being spent to achieve theoretical savings. Then there's Jevon's paradox, which when applied to cars says people will simply drive more when a mile cost them less.

But this is why I simply adore the CARS program. It's penny ante compared to the TARP and other bailouts. And we get something tangible for it: Shiny new cars!...
The buyout program got old cars off the road and their engines spiked. The buyout program nudged people in the direction of new cars, but the new cars came out individual pockets.
 
  • #116
Al68 said:
The broken glass theory of economics, again?

You are again ignoring the gains in the GDP, which represent wealth not sent to foreign oil suppliers. How many times do you need to be told about this before you understand?
 
  • #117
Ivan Seeking said:
You are again ignoring the gains in the GDP, which represent wealth not sent to foreign oil suppliers. How many times do you need to be told about this before you understand?
I'm ignoring nothing. I wish you would refrain from making false personal statements about other people. You are again ignoring the losses in GDP due to the money being taken from the economy, and the loss of the associated wealth creation. (Unless you actually think government is more efficient at wealth creation than the people the money is taken from.)

How many times do you need to be told about this before you understand?
 
  • #118
mheslep said:
You skipped some steps OmCheeto. You can't claim the fuel savings came from just the ~$4000 federal buy out. Someone had to go and buy a new ~$20k to $30k car to get the fuel savings, so a great deal more than $3 billion is being spent to achieve theoretical savings. Then there's Jevon's paradox, which when applied to cars says people will simply drive more when a mile cost them less.

The buyout program got old cars off the road and their engines spiked. The buyout program nudged people in the direction of new cars, but the new cars came out individual pockets.

Exactly! The economy has been tanking because people are afraid. The way to get it back on track is to get people buying again. A $3 billion kicker spawned a $12 billion spending spree. Nothing better for an economy than getting money flowing again.

I was probably too succinct in my post. I try not to put people to sleep, as did my economics instructor back at university.

And I don't buy Jevon's paradox in this scenario. I don't drive a single mile further than I used to. I have less money to buy gas with, because I've got a car loan for the next 4 years.
 
  • #119
OmCheeto said:
Exactly! The economy has been tanking because people are afraid. The way to get it back on track is to get people buying again. A $3 billion kicker spawned a $12 billion spending spree. Nothing better for an economy than getting money flowing again.
The people that spend money productively, hiring, investing in new business or projects, are afraid because they do know what stunt the government is going pull next.

And I don't buy Jevon's paradox in this scenario. I don't drive a single mile further than I used to. I have less money to buy gas with, because I've got a car loan for the next 4 years.
Yeah, Jevon's must be all BS then.
 
  • #120
The Cash for Clunkers program is so successful that it now includes thermal imagers! :smile:

C4C_top_600px.jpg

http://www.emarkmail.com/r.pl?tqfVJZrlW1sFf4vx_6746d3a510d44c74
 
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