Legislation would pay drivers to turn in clunkers
Kathleen Pender
Thursday, April 2, 2009
President Obama has endorsed the idea of using public funds to pay drivers to scrap certain vehicles and replace them with new or more fuel-efficient ones.
This cash-for-clunkers concept is designed to decrease the nation's fuel consumption, reduce greenhouse gas emissions and give struggling automakers a boost. Similar programs have stimulated car sales in some European countries, particularly Germany.
But does it really make sense, from an environmental or financial standpoint, to scrap cars that have many more years of useful life?
Many environmental groups say yes, as long as the replacement cars are genuinely more fuel-efficient than the ones being scrapped.
Although it takes energy to produce, ship and eventually scrap a car, the energy used to power it over a lifetime is - very roughly speaking - eight times greater, says Eli Hopson, Washington representative with the Union of Concerned Scientists.
If you send a gas hog to the scrap heap and buy a new gas sipper, you can offset the cost of producing the sipper within a few years.
On average, "If a new vehicle uses half the fuel used by the vehicle it replaces, it will take only 3.3 years to offset the energy costs of producing the new vehicle," says Therese Langer, transportation program director for the American Council for an Energy-Efficient Economy.
Two cash-for-clunkers bills have been introduced this year, one in the Senate by Diane Feinstein, D-Calif., and one in the House by Rep. Betty Sutton, D-Ohio. Both would give people who turn in certain types of clunkers vouchers to buy more fuel-efficient cars.
Sutton's bill would give people who turn in "high-polluting" vehicles that are at least 8 years old a voucher for $3,000 to $5,000 toward the purchase of a new car assembled in North America. The new vehicle must get better mileage than the old one and must offer at least 27 mpg on the highway for cars and 24 mpg for trucks. The higher the mileage of the replacement car, the bigger the voucher. The voucher is also bigger for cars assembled in the United States than in Canada or Mexico.
Objection to standards
Langer's group cites two "major shortcomings" of the Sutton bill: "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 mpg highway) is very weak, with well over half of all cars sold meeting this threshold."
To address the first concern, Sutton plans to add a requirement that the clunker get less than 18, 19 or 20 mpg on the highway, according to her chief of staff, Nicole Frances Reynolds. Sutton hasn't decided on the exact limit.
Some critics say that Sutton's made-in-North America requirement could violate trade agreements and would prohibit the purchase of many high-mileage models assembled elsewhere, including the Toyota Prius and Honda Insight.
Reynolds says Sutton is looking into whether her bill violates trade agreements.
Both Langer and Hopson prefer Feinstein's bill because it requires the clunker to be an even bigger gas guzzler than what Sutton is contemplating. Feinstein's bill requires the replacement vehicle to exceed fuel-efficiency standards for its class by at least 25 percent.
They also like Feinstein's bill because consumers could use their vouchers to buy cars made anywhere in the world and could put them toward used cars from 2004 or later - a provision added to help lower-income consumers.
Feinstein's vouchers range from $2,500 to $4,500 for a new-car purchase and from $1,500 to $3,000 for a used car. The newer the clunker turned in, the bigger the voucher.
Under both bills, vouchers could also be used to pay for mass transit.
A spokesman for Feinstein says consumers would turn their clunker in to a dealer who must agree to scrap the engine but could recycle other parts. Dealers who want cars for their salvage value could pay consumers a price on top of the government-provided voucher.
SUVs prime candidates
Most consumers would not participate unless the voucher, plus whatever they might get from a dealer, is more than they could get if they sold the car. Older SUVs would be prime candidates for the voucher.
For older, reliable cars that get reasonable mileage, it might be better to hold on.
"Most modern cars can last up to 200,000 miles with just routine maintenance," says Jeff Bartlett, deputy online automotive editor with Consumer Reports. But most people trade them in after five years, when depreciation slows.
"Most people are trading in their vehicles right when it is they are least expensive to own, then rushing into the most expensive period (the first two years) with their next car," Bartlett says.
Cash for clunkers
Two bills would use public funds to pay people who scrap certain cars or trucks and replace them with new or more fuel-efficient ones.
Feinstein bill
S247, Accelerated Retirement of Inefficient Vehicles Act, is sponsored by Sen. Diane Feinstein, D-Calif. The House version, HR520, is sponsored by Rep. Steve Israel, D-N.Y.
-- The clunker: Must be drivable, registered and have a fuel economy rating of less than 18 miles per gallon. (Window-sticker mileage must be less than roughly 15 mpg combined city/highway.)
-- The cash: Participants get a voucher that can be used toward the purchase of a new or used vehicle or for public transit. Vouchers range from $2,500 to $4,500 for a new-car purchase and from $1,500 to $3,000 for a used car or transit. The newer the clunker scrapped, the bigger the voucher.
-- The replacement car: Can be a new vehicle or a used one from 2004 or later. Must exceed fuel-efficiency standards for its class by at least 25 percent and have a sticker price of less than $45,000. Country of origin does not matter.
Sutton bill
HR1550, Consumer Assistance to Recycle and Save Act, by Rep. Betty Sutton, D-Ohio
-- The clunker: Must be a drivable, registered, high-polluting vehicle at least 8 years old.
-- The cash: Participants get a voucher for $3,000 to $5,000 for a new-car purchase or public transit.
-- The replacement car: Must be a new vehicle assembled in North America. Must get better mileage than the clunker and offer at least 27 highway mpg for cars or 24 mpg for trucks (based on window-sticker mileage). The greater the fuel efficiency, the bigger the voucher. Sticker price cannot exceed $35,000.
Net Worth runs Tuesdays, Thursdays and Sundays. E-mail Kathleen Pender at kpender@sfchronicle.com.
This article appeared on page C - 1 of the San Francisco Chronicle
Kathleen Pender
Thursday, April 2, 2009
President Obama has endorsed the idea of using public funds to pay drivers to scrap certain vehicles and replace them with new or more fuel-efficient ones.
This cash-for-clunkers concept is designed to decrease the nation's fuel consumption, reduce greenhouse gas emissions and give struggling automakers a boost. Similar programs have stimulated car sales in some European countries, particularly Germany.
But does it really make sense, from an environmental or financial standpoint, to scrap cars that have many more years of useful life?
Many environmental groups say yes, as long as the replacement cars are genuinely more fuel-efficient than the ones being scrapped.
Although it takes energy to produce, ship and eventually scrap a car, the energy used to power it over a lifetime is - very roughly speaking - eight times greater, says Eli Hopson, Washington representative with the Union of Concerned Scientists.
If you send a gas hog to the scrap heap and buy a new gas sipper, you can offset the cost of producing the sipper within a few years.
On average, "If a new vehicle uses half the fuel used by the vehicle it replaces, it will take only 3.3 years to offset the energy costs of producing the new vehicle," says Therese Langer, transportation program director for the American Council for an Energy-Efficient Economy.
Two cash-for-clunkers bills have been introduced this year, one in the Senate by Diane Feinstein, D-Calif., and one in the House by Rep. Betty Sutton, D-Ohio. Both would give people who turn in certain types of clunkers vouchers to buy more fuel-efficient cars.
Sutton's bill would give people who turn in "high-polluting" vehicles that are at least 8 years old a voucher for $3,000 to $5,000 toward the purchase of a new car assembled in North America. The new vehicle must get better mileage than the old one and must offer at least 27 mpg on the highway for cars and 24 mpg for trucks. The higher the mileage of the replacement car, the bigger the voucher. The voucher is also bigger for cars assembled in the United States than in Canada or Mexico.
Objection to standards
Langer's group cites two "major shortcomings" of the Sutton bill: "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 mpg highway) is very weak, with well over half of all cars sold meeting this threshold."
To address the first concern, Sutton plans to add a requirement that the clunker get less than 18, 19 or 20 mpg on the highway, according to her chief of staff, Nicole Frances Reynolds. Sutton hasn't decided on the exact limit.
Some critics say that Sutton's made-in-North America requirement could violate trade agreements and would prohibit the purchase of many high-mileage models assembled elsewhere, including the Toyota Prius and Honda Insight.
Reynolds says Sutton is looking into whether her bill violates trade agreements.
Both Langer and Hopson prefer Feinstein's bill because it requires the clunker to be an even bigger gas guzzler than what Sutton is contemplating. Feinstein's bill requires the replacement vehicle to exceed fuel-efficiency standards for its class by at least 25 percent.
They also like Feinstein's bill because consumers could use their vouchers to buy cars made anywhere in the world and could put them toward used cars from 2004 or later - a provision added to help lower-income consumers.
Feinstein's vouchers range from $2,500 to $4,500 for a new-car purchase and from $1,500 to $3,000 for a used car. The newer the clunker turned in, the bigger the voucher.
Under both bills, vouchers could also be used to pay for mass transit.
A spokesman for Feinstein says consumers would turn their clunker in to a dealer who must agree to scrap the engine but could recycle other parts. Dealers who want cars for their salvage value could pay consumers a price on top of the government-provided voucher.
SUVs prime candidates
Most consumers would not participate unless the voucher, plus whatever they might get from a dealer, is more than they could get if they sold the car. Older SUVs would be prime candidates for the voucher.
For older, reliable cars that get reasonable mileage, it might be better to hold on.
"Most modern cars can last up to 200,000 miles with just routine maintenance," says Jeff Bartlett, deputy online automotive editor with Consumer Reports. But most people trade them in after five years, when depreciation slows.
"Most people are trading in their vehicles right when it is they are least expensive to own, then rushing into the most expensive period (the first two years) with their next car," Bartlett says.
Cash for clunkers
Two bills would use public funds to pay people who scrap certain cars or trucks and replace them with new or more fuel-efficient ones.
Feinstein bill
S247, Accelerated Retirement of Inefficient Vehicles Act, is sponsored by Sen. Diane Feinstein, D-Calif. The House version, HR520, is sponsored by Rep. Steve Israel, D-N.Y.
-- The clunker: Must be drivable, registered and have a fuel economy rating of less than 18 miles per gallon. (Window-sticker mileage must be less than roughly 15 mpg combined city/highway.)
-- The cash: Participants get a voucher that can be used toward the purchase of a new or used vehicle or for public transit. Vouchers range from $2,500 to $4,500 for a new-car purchase and from $1,500 to $3,000 for a used car or transit. The newer the clunker scrapped, the bigger the voucher.
-- The replacement car: Can be a new vehicle or a used one from 2004 or later. Must exceed fuel-efficiency standards for its class by at least 25 percent and have a sticker price of less than $45,000. Country of origin does not matter.
Sutton bill
HR1550, Consumer Assistance to Recycle and Save Act, by Rep. Betty Sutton, D-Ohio
-- The clunker: Must be a drivable, registered, high-polluting vehicle at least 8 years old.
-- The cash: Participants get a voucher for $3,000 to $5,000 for a new-car purchase or public transit.
-- The replacement car: Must be a new vehicle assembled in North America. Must get better mileage than the clunker and offer at least 27 highway mpg for cars or 24 mpg for trucks (based on window-sticker mileage). The greater the fuel efficiency, the bigger the voucher. Sticker price cannot exceed $35,000.
Net Worth runs Tuesdays, Thursdays and Sundays. E-mail Kathleen Pender at kpender@sfchronicle.com.
This article appeared on page C - 1 of the San Francisco Chronicle
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