THE VINE MARCH 30, 2009
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As always, Jon Cohn is your go-to source for auto-industry news. I'll just point out that, in his remarks today, Obama made the intriguing suggestion that he'd push for a federal "cash-for-clunkers" program, whereby people could turn in their old inefficient cars and get a tax credit to buy a newer, cleaner car. Here's Obama:
Finally, several members of Congress have proposed an even more ambitious incentive program to increase car sales while modernizing our auto fleet. 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. I want to work with Congress to identify parts of the Recovery Act that could be trimmed to fund such a program, and make it retroactive starting today.
The tip is from Russ Walker. Here's Jason Bordoff of Brookings making the case for this program, which could theoretically clean up the air, reduce carbon emissions, and stimulate the economy by boosting new auto sales all in one blow. On the other hand, here's an old post by Rob Inglis wondering if the plan might have unexpected consequences—among other things, the reduction in tailpipe emissions might get partly offset by an increase in car-manufacturing emissions.
Still, it's not a bad gesture. Right now a big dilemma for the auto industry is that they're struggling to meet stricter fuel-economy standards and are supposed to be greening their fleets in exchange for congressional bailout money, but Americans aren't showing much zest for smaller, efficient cars, let alone hybrids, with gas prices back down. A gas tax would nudge consumers in a greener direction, but that's not going anywhere in Congress. (And, just to correct Jon a bit, Obama's proposed cap-and-trade regime for carbon emissions likely wouldn't raise the price of gasoline by very much at all—maybe ten cents a gallon in the short term.) A cash-for-clunkers program might be the easiest way to thread this needle, or square this circle, or whatever the clich
6 comments
Will Congress make the plan similar to what the Germans are doing, which also helps bolster their domestic industry? I doubt it. The Senators from Toyota and Nissan, um, Alabama and Tenn. likely would block such a move. Why no cry from our side that the German plan is "protectionist"?
- tnmats
March 30, 2009 at 5:39pm
Blaming Americans for not wanting hybrids is a bit presumptuous still. As I mentioned in your previous blog post, your example vehicle, the Ford Fusion Hybrid, while great on paper, is not available in most dealerships yet.
And while we are at this, at least also require these vehicles to be flex fuel (gasoline/ethanol/methanol) as well has hybrid. That way we'll have more options later. This would also slightly advantage GM which has a step up on pairing flex fuel engines with hybrid batteries. And supporting more fuel options give us an alternative to gasoline while not specifically preferencing corn-based ethanol which is very environmentally destructive as we know.
- acria multa
March 30, 2009 at 7:06pm
In France this program was used to permit trade-ins of 10+ old cars for specified fuel-efficent, reduced pollution vehicles. It was successful. But do the America manufactures have product available which would meet these criteria? Federal funding so that dopes can buy Humvees doesn't make sense. But why not have them buy Toyotas and Hondas? They built products in the US generally superior to the "domestic" manufactures. And Toyota will likely still be an employer in America when GM is just a footnote in the history books.
- wmccwright
March 30, 2009 at 8:12pm
this was the really good news in the whole speech today. programs in Texas and elsewhere have had mixed success, but it should be a congressional priority. annual sales volume is so low at about 9 million vehicles/year that a cash for clunkers program can only help meet all the goals. problem is those who drive those old clunkers tend to be too poor to buy anything new. once had a painter who, in 1998, told me $700 would buy him a less old car...
congress ought to do a lot of things. yeah, right. headless chickens.
- K2K
March 30, 2009 at 10:39pm
Why are Hummers presumed to be the only thing American car makers build? Get your head out of the sand. They build a lot of vehicles that get good mileage. A Chevy Malibu with a 4 cylinder and 6 speed auto gets great gas mileage and is available right now. There are other cars like that too from the domestics (4 cyl. Fusion comes to mind). I have a "fuel efficient" 4 cyl. Mazda 3 but it's gas mileage isn't much better than my wife's V6 powered mid-size Saturn station wagon (maybe 1-2 mpg). So much for all of those Japanese cars being fuel thrifty. And the Japanese build plenty of fuel thirsty vehicles if you care to look at what they actually sell.
- tnmats
March 31, 2009 at 12:15pm
A large number of Americans are never, and many others only rarely, going to be able to purchase a new car without a significant subsidy. The problem isn't that "average Americans" just don't care about fuel efficiency -- the problem is that those potential buyers for whom fuel efficiency is likely to be of most concern are also likely to be the buyers who can least afford it. New car buyers are not average Americans -- they are an increasingly narrow and increasingly affluent part of the overall US car market (a market that is dominated by USED car sales). The reality is; affluent new car buyers are for the most part NOT FUEL PRICE SENSITIVE. They can afford to absorb fluctuations in fuel costs and therefore are more likely to make their buying decisions on the basis of factors like status, comfort, safety and performance. This is a simple fact that several European countries have grasped, but one that is never really addressed in Americans' discussions of the problems Detroit faces and why it is difficult for Detroit to "go green." I presume that is because we like to think we are still a fairly egalitarian, broadly middle class society in which the vast majority of "average" Americans with median household incomes can afford a nice home in the suburbs with a couple of new cars in the driveway (cars they will replace every couple of years). But, the fact is, without the help of extremely easy and questionable credit, and massive amounts of debt, that has not been true for a long time.
- esmense
March 31, 2009 at 12:32pm