Cash-for-Clunkers: We’re No Deutschland « The Washington Independent
In his speech on the auto industry yesterday, President Obama promoted the idea of a so-called “cash-for-clunkers” program that would offer financial incentives for people to trade in their old gas-guzzlers for more fuel-efficient vehicles. “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,” he said.
And the results in Europe have been impressive. A cash-for-clunkers program in Germany helped boost new car orders by 63 percent in February, according to the Verband der Automobilindustrie, a German automobile interest group. As a result, the country’s auto fleet became more fuel efficient and kinder to the environment.
Sound too good to be true? That’s because it is — for the United States, at least. As The Wall Street Journal points out, gas costs nearly $6 a gallon in Germany, even with oil prices way down from last year. The incentive to trade in your old Land Rover for a new Smart car are huge there, when you can save nearly $100 on a long day of driving with the smaller vehicle.
Here in the United States, where gas is a third of the price of Germany’s and a high gas tax seems politically impossible, there’s no way that a cash-for-clunkers program could have the same kind of traction.
Still, if Rep. Betty Sutton’s (D-Ohio) Consumer Assistance to Recycle and Save (CARS) Act does pass and provide credits of up to $5,000 for people seeking to trade up, it would be a small but important step toward the creation of a strong, fuel-efficient U.S. auto industry.
Update: Evidently Sutton’s CARS bill has its flaws. From the American Council for an Energy-Efficient Economy:
The most serious shortcomings of the bill are:
-The qualification for vehicles to be scrapped under the program is based on age (model year 2000 or earlier) rather than poor fuel economy; and
-The fuel economy threshold for U.S.-assembled cars to be purchased under the program (27 miles per gallon highway) is very weak, with well over half of all cars sold meeting this threshold.
Scrapping all pre-2001 vehicles indiscriminately does not serve any valid purpose and should not be funded by taxpayers. Fuel economy in the U.S. has been roughly flat since the late 1980s, so replacing an older vehicle with a newer one does not generally save fuel. The bill as currently drafted fails to ensure that a new vehicle purchased under the program will be significantly more fuel-efficient than the vehicle that is scrapped.
Crafting a bill that will both accelerate our transition to a vehicle fleet that dramatically reduces oil consumption and greenhouse gas emissions AND stimulate demand for new vehicles to help our auto industry recover is an achievable goal. Any bill offering federal subsidies for new vehicle purchases should require that the scrapped vehicle is a fuel-inefficient vehicle, not simply an old vehicle, and that the purchased vehicle is a highly fuel-efficient vehicle.
We recommend the approach taken in H.R. 520, the ARIVA bill introduced in January by Rep. Israel, which promotes scrappage of vehicles having a combined fuel economy under 18 miles per gallon and purchase of vehicles exceeding Corporate Average Fuel Economy (CAFE) standards by at least 25 percent.