So, here we are… January 2010… and I’ve been wondering how that whole Cash for Clunkers thing worked out. I mean, last I heard (back in August) there were a bunch of dealerships still screaming… “SHOW ME THE MONEY!!!”… Then… nuthin’. SIlence… Not another peep from anywhere on what the real numbers were or whether or not these guys ever got reimbursed by the government for their participation in the program Obama vowed would save the dying auto industry AND (ahem) savetheplanet (cough, cough).
On a website called Trade In Your Clunker I found “An Open Letter To Americans – Why Cash for Clunkers Failed America”, Brian Pasch, CEO of Pasch Consulting Group brings up some interesting facts.
The Cash for Clunkers program was passed by Congress and was signed into law on June 24, 2009. At that time, the law empowered the National Highway Transportation Safety Administration (NHTSA) to create the Car Allowance Rebate System (CARS) and required the NHTSA Secretary to set up a website within 30 days to administer the stimulus money and support the needs of both consumers and dealers.
A month later, on July 24, 2009, The Final Rule document was released by the NHTSA and dealers were told they could register for the program three days later on Monday July 27, 2009. Unfortunately, the NHTSA website could not handle the volume of simultaneous registrations and the frequency of improperly entered codes resulted in delays. Because the website could not handle the flow of transactions, car dealers were forced to spend hours entering the information for just one sale and had to keep staff working overtime to enter sales when website traffic was lower.
In the meantime, the NHTSA hired only 100 employees to undertake the task of reviewing the entered sales applications but found it necessay to triple that number in a few days. In the first week over 200,000 sales were made, giving each of the 300 employees about 7,000 cases to inspect, review and approve.
Sounds like a whole lot of money was spent (by dealers to pay employee overtime and the salaries of 300 NHTSA employees) to handle just the processing of information through the website alone. Was that expense ever factored in by Obama when he came out and said:
“… I’m happy to report that it has succeeded well beyond our expectations and all expectations, and we’re already seeing a dramatic increase in showroom traffic at local car dealers.”
American Issues Project wonders, how the Obama administration defines success in this venture. Was success defined by customers wanting to take part in this program and overwhelming the finances allocated for said program to the point where the program had to be shut down much earlier than expected?
A recent blog post from the Heritage Foundation recently noted some of the negative consequences of the program including the fact that the program does not help the environment as much as people had hoped, it hurts charities (in that people who might otherwise donate cars to charities are now profiting from them) and it gets the government even more involved in the automobile industry.
According to a study conducted by Edmund.com, the average transaction price for a new vehicle in August 2009 was only $26,915 minus, of course, the average cash rebate of $1,667… In the end… Cash for Clunkers cost taxpayers $24,000 per vehicle sold.
Wow… Such a deal.
Of the guestimated 690, 000 cars sold during the Cash for Clunkers program, analysts at Edmund.com have calculated that only 125,000 of the sales were incremental. The rest of the sales, they claim, were to people who were going to buy a new car during that time frame anyway, regardless of the existence of the program. J.D. Power said more than 70% of sales may have happened later this year even if the government hadn’t spent $3 billion on the clunker program. In August, Edmunds said purchase intent was already down 11% from June, meaning that fewer people were looking at new cars. Further, Senior Analyst David Tompkins, PhD, (of Edmund) stated that many of these new car buyers would not have been inclined to trade in their old vehicle as part of the transaction without the existance of the program, which (while perhaps giving environmentalists something to cheer about) the “economic claims have been rendered quite weak.”
And what about those… “environmental benefits”? Irwin Stelzer wrote in the Washigton Examiner:
On the best of assumptions about the fuel saved by replacing inefficient Clunkers with cars that get perhaps 10 mpg more than the Clunkers they replace, the reduction in gasoline consumption will cut our oil consumption by 0.2 percent per year, or less than a single day’s gasoline use.
Wow… a whole 0.2%
The biggest goal of this ridiculous program was to cut carbon dioxide emissions staying the promised hell-fire to come with Global Warming. But, according to Christopher Knittle, an economics professor at the University of California at Davis “As an environmental program, Cash for Clunkers is basically overpaying for the environmental benefits,” Christopher estimated that the cost of reducing emissions was somewhere between $237 per ton and $365 per ton. Since the market price for carbon has fluctuated between around $20 and $40 per ton, “the program is an expensive way to reduce greenhouse gases.”
I am finding other supportive statistics for this program are being “rendered quite weak” as well.
According to Cars Blog.com, 690,114 older cars were taken off the road, including 450,778 SUVs and other light trucks that likely lacked electronic stability control and other modern safety equipment. The National Highway Traffic Safety Administration has estimated that making ESC standard on new cars would save as many as 10,000 lives a year.
Hmmmm “lives saved”. Is that like… “jobs saved”? Oh wait!
The Department of Transportation credits the program with saving 42,000 jobs in the auto industry and says it expects those jobs will be sustainable, because automakers have ramped up production to meet the clunkers demand.
Sooo… it saved lives AND jobs!… wow…
But, according to an April 2009 report on AutomotiveAddicts.com (who actually used the actual test results of real crash tests and came up with some… you know… real actual numbers), say frontal crash tests of Minicars made by Toyota, Honda and Daimler AG performed poorly.
The Honda Fit, Toyota Yaris and Smart ForTwo collapsed in the impact of the test conducted. The test consisted of a frontal off-set crash head-on into one of the car makes sister mid-sized cars at about 40 miles per hour. Even with the protection of the airbags the study reviled a considerable amount of injuries to the head and legs of occupants in the smaller car.
National Transport, LLC (who actually seems to be trying very hard to show support for the vehicle) says of the (ahem) “Smart Car” (coughcoughahem):
…the smart’s design is that the cage design creates its own dilemma. Even though you may not get crushed to bits when you slam into that Hummer, you will still likely die. Your death would not however be from getting crushed between your seat and the steering-wheel, but rather from your internal organs smashing into your skeleton. Since the smart is designed not to crumple the impact will eventually be absorbed by your body.
Interestingly, they also say:
All-in-all the smart car is probably a safe choice for slower driving, but not something you want to slam into a wall with at high speeds.
Umm… wait. A “safe choice”… for “slower driving”… What, like on a golf course? Orrrr… through a quiet neighborhood but stay off of any major roadways where there might be other cars… BIGGER cars… going more than saaaayyy… 35ish? And what is UP with the “not something you want to slam into a wall with at high speeds” thing all about? No one gets in ANY car and WANTS to slam into a brick wall at high speed. Things like that happen unintentionally… That’s why they call them ACCIDENTS. If people WANTED to slam their car into a brick wall at high speed… They would call them ONPURPOSES!
Great… Now my head hurts.
A 2005 article in USA Today said:
As a group, occupants of small cars are more likely to die in crashes than those in bigger, heavier vehicles are, according to data from the government, the insurance industry and the National Academy of Sciences (NAS).
They said compacts and subcompacts, such as Civic, Toyota Corolla, Ford Focus, Mazda3, Nissan Sentra, Chevrolet Cobalt were only about 14% of vehicles on the road. But they accounted for nearly 24% of occupants killed in crashes where one or two vehicles were involved.
Have these statistics changed…. yeah…
In 2007, small-car crashes still resulted in a 17% higher fatality rate than midsize-car crashes.
Oh, and what happened to all of those Clunkers? Well, they were put through the favored process of all envoronmentalists… They were… “recycled”. You know… crushed in a big smashy thing and turned into scrap.
The Automotive Recyclers Association (ARA) estimates that a working engine and drive train account for 50 to 60 percent of the value of a scrapped auto, and considering it costs upwards of $700 to process a car for recycling, this significantly reduces the revenue of car recycling.
Rules (which are quite extensive) given by the Department of Transportation regulating the Engine Disablement Procedures for the CARS Program, state:
CAUTION: Wear goggles and gloves. Appropriate protective clothing should be worn to prevent silicate solution from coming into contact with the skin.
Ummm… Sounds good for the environment to me.
Just a week into the program, the National Association of Auto Dealers (NADA) lobbied to tweak the rules. They succeeded. Dealers, who were originally forced to dismantle the cars before receiving the government’s check, could now hold on to cars until they were reimbursed… so long as they ruin the car’s engine within seven days. You know… the most valuable part of the car about to be scrapped. In other words, as proven with all other recycling programs, it costs far more than it saves.
So, has anyone else heard of the final numbers? Does anyone out there know if the car dealerships have received all of their promised cashola for participation in this extravaganza of idiocy? Does anyone have ANY strong positive to toss up in defense of this insanity? Can ANYone explain why the people who designed this miserable exercise should be in charge of our entire Health Care System?