Congress Considers Gas-Guzzler Trade-in Rebate

1998explorer The newly christened 111th Congress is barely a week old, and already there’s legislation on the table that could affect the auto universe. Both the House and Senate have proposed legislation that attempts to get old, fuel-inefficient vehicles off the road. The program, irreverently called “Cash for Clunkers,” would offer drivers of older gas-guzzlers — say, a 1999 Ford Explorer — $2,500 to $4,500 to purchase a new vehicle.

The bill is similar to other plans in Texas, California and Canada that we discussed earlier, and aims to rid the road of four million “clunkers” between now and 2012.

So where’s the catch? First off, the vehicle would have to be five years old (model year 2004 or earlier) and get an EPA-estimated 18 mpg combined or less. The vehicle must also be in drivable condition and must have been registered for at least the past 120 days. That doesn’t really sound like a clunker, does it?

That part is easy, though; the tricky part is that when you get the reimbursement slip, you have to buy a new or used vehicle that gets a fuel economy rating that exceeds the CAFE target set for its class of vehicle (car or light truck) by at least 25%.

So what does that mean? Say you turn in that 1999 Ford Explorer, which gets 16 mpg, and want to buy a comparable SUV. In order to make the voucher work, you must buy a vehicle that gets 25% better fuel economy than CAFE’s 23.1 mpg minimum requirement for a light truck. That means your new truck would need to get at least 28-29 mpg combined in order for you to be able to use the voucher.

A quick check at fueleconomy.gov reveals that only four “light trucks” — the Ford Escape Hybrid, Mercury Mariner Hybrid, Mazda Tribute Hybrid and Saturn Vue Hybrid — would qualify. The proposal didn’t say whether you could combine the voucher with available hybrid tax credits, though that would make for a pretty sweet deal.

If you opt to get a new car instead, it must get mileage that’s 25% better than 27.5 mpg. Admittedly, more cars would cross the 34-35 mpg qualifying mark, but they’re either small or they’re expensive hybrids. If you need a seven- or eight-passenger minivan or crossover, this bill can’t really help you.

Sen. Dianne Feinstein: "Cash for Clunkers"

By Colin Bird | January 16, 2009 | Comments (44)
Tags: In The News

Comments 

The CAFE test is different from the fuel economy ratings available to consumers. Would this legislation combine the two, or convert one into the other? If the latter, more SUVs would be eligible than the hybrids.

There are two different fuel economy ratings. Judging from Dianne Feinstein's press release, I believe she means the fuel economy rating available to the consumer.

The press release isn't perfectly clear, but it seems to suggest that the problem is the opposite way than this blog post is suggesting.

The requirement is that the vehicles being traded in "must have a when-new fuel economy rating of less than 18 miles per gallon (as reported by the original manufacturer for purposes of CAFE compliance)."

Since CAFE is much higher than the consumer figures, how many vehicles get under 18 mpg per CAFE?

Tor

...just increase the gas price. It will do the same thing with fewer distorsion.

Hey, it may even help save Social Security too ;) Otherwise just give rebates to poor people to offset the hit and make it politically feasible.

Juan Carlos

what if you are going form a corolla to a prius? one's carbon footprint may actually go down farther. and what of those that went from 11mpg to 16mpg? and we expect people to get a car loan/payments to say a few dollars?

J

This is a really BS bill!
So just because those idiots decided to buy a fuel inefficient junk and we all have to pay for their stupid decision? WTH is that?

Troy S.

I own a 98 Civic that gets excellent gas mileage. I do however want something newer. I feel this bill is unfairly "rewarding" those who chose guzzlers. Why shouldn't I be offered the same amount of money to replace/trade in my 98 Civic?

This makes me feel as if I need to go out and make bad decisions in order to get rewarded.

It's highly unfair to "single out" a group of auto owners and "bail them out" at the expense of more fuel thrifty vehicle owners. This suddenly negates the purpose of me buying my fuel miser to begin with.

I've had to live with a smaller vehicle and navigate it through the roads full of gas guzzlers so they could get some free money after guzzling more fuel than me over the past 10 years.

I am shouting FOUL!!!!

J

Troy,
Remember the bailout for home owners?
Same crap bills!

Troy S.

You're right J. Seems like there's more incentive to make bad decisons than good ones.

Red

Round up all the old gas guzzlers with these incentives. Send the Gas Guzzlers to the OPEC countries where they would bring a good price. Then charge them through the nose for parts - like a $1,000 starter, $4,000 tranny etc. That just might revive our auto industry.

Ken L.

"It's highly unfair to "single out" a group of auto owners and "bail them out" at the expense of more fuel thrifty vehicle owners."

What you’re forgetting is that those that purchased a hybrid where rewarded with a tax CREDIT. How fair is that? Being able to afford a new car AND get a tax credit.

J

Ken,
That is because they were making a right decision of trying to cut down oil consumption.

Bloke

J, you mindless fool, that is exactly what this is intended to do.

Ken L.

If reducing our nation’s fuel consumption is the ultimate goal of this proposed bill, then it shouldn’t be meeting so much resistance from you guys. This bill wouldn’t increase the resale value of your “clunker”; it’ll only motivate the masses to buying something more fuel efficient.

Ken, its just the other part of being "green" in our country, green with envy that someone else is getting something they are not.

J

Bloke,
You are the mindless fool.
Those people were just like you when they bought those gas hog to begin with, and now their asses are being covered by my tax dollar. WTF is that?!

J

Ken,

If they made the correct decision to begin with, this bill will not be needed.
The country is being insane now, making wrong decision is the right thing to do, because your ass will be saved by the government as long as you whine to them saying you can't afford anything. It was their fault to begin with!
Same idea as the dumb ass sued McD for having hot coffee spilled on her laps. This is what's on their mind: It is always someone else's fault when I did something wrong.

Blaming their stupidity onto others as their responsibility.

Ken L.

Nobody is screaming give me a voucher and take the SUV off my hands. The consumer did not ask for it; it’s the government that wants to get old, inefficient vehicles off the road. The government is trying to entice them with these vouchers, you can always decline. Besides, what is “the correct decision”? It was a different period in time…. different people, different needs. We all know America is a forgiving country.

Bloke

J, good come back. You really are a foreigner huh? We have been through this long ago, at the moment I drive a 4 cyl american sedan. I have never owned anything bigger than a 4 cyl. I would gladly accept this piece of legislation. It will help my children and all the future generations. It will also get a lot of unsafe vehicles off of roads. Maybe if you weren't such an ethnocentric A-hole you would understand the idea is to benefit your neighbor, which benefits yourself. Your just another idiot who jumps on the popular bandwagon.

"Blaming their stupidity onto others as their responsibility" - Yeah really WTF? Is this even a sentence? Seriously take a minute and write in English.

Josh

So, if I traded my Durango in (bought it when I drove under 100 miles a week), then would I ONLY get the credit from the gov, or would I get my trade in value AND the credit from the gov? Hmmmm?

DodgeFan

This bill is worthless because it only addresses the extreme end of the spectrum. My 94 Dodge Intrepid was rerated at 18/27 . I definitely average more than SUV milleage. Truthful with gently driving its 20/30-32. If I sold I were downsize due to future fuel costs. I have a sem-cluncker and no relief. The politicans realize one thing that SUV are built to last and will need to give incentives to get people to change out.

Juan Carlos

josh, would probably be like the hybrid rebate. on tax time you will put it on your 1040. and what is the car dealer to do with the trucks? sell them? and what of the car that says is gives you 22mpg but it really gave you 20mpg and now gives you 18?

Josh

Thanks for the response - we will see if anything really happens with this deal. I would like to get something that gets better mileage - but it is worth about 5-6k less (trade value) than what I owe, after paying a year on it. Didn't really think I would go from driving about 8,000 miles a year to about 24,000 miles!

Joanne

Hey Troy,

I have a 1992 stick shift honda civic and my hubby has a 2000 auto trans honda civic. My old 1992 STILL gets 40 mpg highway and 36-37 mpg combined highway/city and the hubby's gets 5 mpg less than mine.

Yup, all we're getting is more taxes to pay for other people's poor decision.

Now, I have the money to pay cash for two new cars, but this type of program sure ain't gonna pry it out of my hands.

Nope... soon as my house is paid off (I'm paying extra every month and it will be totally paid off 16 years after I bought it brand spanking new), I'm telling my hubby to quit his job. (I already quit mine in 2000).

And when he does there will be NO MORE medicare taxes, NO MORE social security taxes, NO MORE income taxes, NO MORE capital gains taxes.

I'm SICK of bailing everyone out, and come hell or high water, the government is going to stop fleecing me.

Ben Y.

@J
The only rewards of getting a Hybrid should be that your:

1) Getting higher fuel efficency.

and

2) Saving the environment.

I don't see how just because they are able to afford a hybrid makes them granted to a tax cut. Fudge I'd convert my clunker of a Taurus to a hybrid.....if I had the money. :P

bob

Why not just tax them instead of giving them a rebate? Im sure that would make them trade it in even faster.

Chris

I needed a pickup truck to do my job and now I don't. It does not make me a moron for owning one like some suggest. Why can't the government help me out to get it off the road? I pay taxes that pay for ridiculous things and now I need help to be able to stop using so much gas and help the environment. I have absolutely no problem with whatever kind of vehicle I have to choose from since I am being helped. Because people got themselves in trouble buying houses they could never afford my company has cut back and when I was trying to be responsible and work using my truck I got screwed and need help. I can keep my truck, sure, but it is not responsible as far as gas/oil usage and not very earth friendly. Don't necessarily think people with trucks are ignorant. You know who is ignorant? The idiots in my neighborhood who purchased homes they couldn't afford, went into forclosure, house sold for $100K less than it should and now my house value is in the toilet....be pissed at them not the person hauling drywall, landscaping material, etc. Don't like the bailout? Fine but don't assume a guy with a pickup is irresponsible.

The $4,500 voucher is not enough to get some of the biggest gas hogs off the road that still have a high blue book value.

f

Looks like I'll be driving my 1989 S-10 Blazer for another 20 years.

Guy who needs his SUV

I'm so sick and tired of listening and reading trash about SUV's and trucks. Like me, many people bought an SUV because they have a need for a way to pull a large trailer and carry six or seven people. You can not pull a 10,000lb trailer with a compact car. Oh, and how many times have you ever been talked into or forced into buying a truck or SUV that you did not want. Thanks to so many people trading in SUV's, I got a great deal on mine. I won't be getting rid of it anytime soon.

Mez

As has been said, there are those of us who NEED a truck. I have a 30 year old truck that I would be tickled pink to have someone give me $2000 for, but it won't happen because I will replace it with a newer truck that won't qualify for the program.
I think the elected officials should stop trying to push their personal ideals on the rest of us.

mfgrace

So basically you can't trade a pickup for a new pickup unless it is a hibreed. That adds to cost of the vehical so much that even if you can double dip, you still lose.
Perfect, another waste of time and money from Uncle Sam.
Who would have thunk it!

JR

First of all I bought a 94 jeep when i graduated from high school and i still have it. The only reason why is i am paying off my student loan and my house. 15 yrs age we did not see those cars as gas guzzlers for the fact that gas was 88 cents a gallon. I can not afford to get rid of my SUV and by a hybrid for the fact that all of them are still very expensive even for the basic models. And it is true and not fair for those who could afford to buy a hybrid when they came out to get the tax credit. That tells us that if u could afford a hybrid when it came out then u didn't need the tax credit so allow some of us who can't afford a new car and are so desperately trying to get rid of the gas guzzler have are chance. If you got money from the gov't then I want my share too.

Mike

I really dont understand this... I have a 1989 jeep grand wagoneer that gets 11mpg combined... Was thinking about getting a Truck, Chevy colorado and it gets 19 combined. But i was ready about CAFE? and i would have to get a truck that gets like 28-29?? WTF is that??? Should it not be that we should get a credt as long as the MPG is better then your current vehicle?!! unless i missread, tell me if im wrong.

Steve

Will this incentive be offered in addition to a trade-in by the dealer, or is it in lieu of any trade -in?

Realistic American

This is another example of ignorance. We are being told to give up our SUV's & Trucks for an inferior vehicle for what? The environment that the Politicians that drive & fly all over in vehicles that get 6-10 MPH due to there weight & design not to mention motorcades. My God, end that gross abuse & the green house issues will be radically improved. The ability to produce electric cars is here so why doesn't some one DEMAND the auto makers put out a decent looking & functional vehicle?
Come on my poor little sheep...wake up & realize you live in a political system that gives itself a raise in the middle of an economic crisis, they don't care about anything other than what serves their agenda and keeps We The People under the thumb.
Kick them ALL out or fend for yourself. Anyone who believes there is going to be change through examples like this are either too dumb to know better or smart enough to be on the payroll.

Fernando C

Hey the only people who benefit from all this "green" junk are the people who make alot of money that don't need to be "green". We buy car/trucks or SUV's, that do great on gas and the price of gas is going to "really" go through the roof. Supply and demand, we can't win, only the people who don't pay for gas or have so much money that the price of gas does not affect them, are the ones who push all this green stuff.

Debsta

When does this rebate go into effect? Any one know the start date?

Dee

Hey guys, no it's not going to help only those who make a great deal of money, if you think 26K per year is a great deal of money, WOW. This plan would help me unload a used car that I bought because I had no other options, money, credit at the time. Please don't group us all in the same category, we sometimes deal with what we have, not because we have many choices. I was not born a Kennedy or Rockefeller and had no silver spoon. There are tons of us in the same boat.

bud

I guess I will continue to drive my 31 year old nine mile per gallon gas guzzler since it is not qualified for a rebate.

EFFECTIVE PROGRAM HUH

Carnetta Hartley

should the dealers be requiring a extra down payment on the trade in. I thought the rebate was all that was required.

Tom

Sorry folks...this is just one more cheat on the american consumer. Any new car can be subject to major discounts off of MSRP and sold for much less if the dealer wants or needs to get rid of it. He has too many Impalas then he can discount them by #10, 000 and act like he is losing money when he is still making $5,000 on every sale. Bring in your clunker before the rebate and yep he'll give you 5 grand for it in trade-in and take it to the auction. After the program he'll give you the government money and junk it. Now guess in which program you will pay the most for your Impala. Think about this too! People who drive gas guzzlers do so because they cannot afford new vehicles. They can't afford to drive them more than 50 miles a week but they have to have something. Now 20 gallons of gas a month is $60. A new car would use half of that or $30 but add in a payment of $300. What would you do if the $300 meant not buying groceries for every other week. For this program to mean something it has to be on a real basis where the bluebook retail value of a used car is the basis of sale. For example the buyer has a 20 year old truck that has a rating of 12 mpg. He goes to a dealer who has a 10 year old Corolla for $5000. He gives the guy $500 and his truck and drives home in a car that gets 24 mpg. Even better he buys a 20 year old Corolla for $2000 and the government gives the consumer a check for $2500. Now this will get the guzzlers off the road and money in the pocket of the very people who need it the most.

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Dianthe Gainus

Need to get rid of this gas gustler pontiac 05 and get in to a better coar and affordable with almost no money but a little money

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