<p>Good point, NorthEastMom2, but I’ve already checked the government websites that show the recalculated EPA combined mileage. Ford also has a calculator on their website, which also uses the current (recalculated) EPA combined mileage. Everywhere I check, my minivan comes out at 19. Actual mileage isn’t that high, by the way. I follow this pretty closely, recalculating every time I buy gas. I’m actually getting around 17 mpg, but it’s the official EPA estimate, not actual mileage, that counts.</p>
<p>
</p>
<p>I suppose that’s true at the margins, but I don’t know how great the effect will be. In the first place, it’s a limited-duration (until Nov. 2009), limited dollar-volume ($1 billion, enough for about 250,000 purchases) program; lots of people who nominally qualify may not be able to get the subsidy. And the impacts will differ in different segments of the used car market. Cars more than 25 years old won’t qualify; they’ll still be available, probably at close to their present price as there’s relatively low demand for cars that old. Cars worth more than $4500 at trade-in won’t be affected, at least not directly, since if your car is worth that much you’re better off selling it as a trade-in rather than scrapping it for the $4500; so those cars will still be available on the used-car market. Cars from the eligible years that get 18 mpg or less with a present trade-in value of less than $4500 now have a presumptive value of $4500, but ONLY if the owner has enough money to trade the “clunker” in for a new car; you won’t be able to get that $4500 from someone else in a private transaction, because they’ll need to be able to show they owned and insured the car for at least a year to be eligible for the subsidy. Cars getting >18 mpg (like my minivan) don’t qualify for the subsidy, and consequently won’t be worth much more. </p>
<p>If the program is fully successful and it takes 250,000 low-mpg vehicles off the road, that’s still a drop in the bucket in a U.S. used car market that sells 40 to 45 million vehicles a year—and more in a recession, when many people opt for used cars over new cars. So I’d expect the impact on used car prices to be pretty negligible. </p>
<p>Also, don’t blame all the used car price increase you do see on the cash-for-clunkers program. Used car prices have already been rising, as they generally do during a recession due to increased demand (more people buying used instead of new) and reduced supply (fewer dealer trade-ins, fewer sales of rental cars as rental companies hold on to their fleets longer). Cash-for-clunkers will put a further dent in the supply, but a relatively small one.</p>
I know you can play with the %local %freeway to bring down your average. Not sure if the dealer will go with it.<br>
And i can’t believe i’m following cash for clunkers.</p>
<p>I heard that on NPR this morning too. If you’re considering the trade-in best do it NOW. All existing deals will be honored, but the program has been so popular they’re about out of funds.</p>
<p>Our local news also reported that not all dealers are even registered for this program. Make sure you’re dealing with someone who knows this program and do it fast.</p>
<p>Does anyone besides me think that if the govt cant even estimate costs of cash for clunkers with any degree of precision we dont want them runnning health care??</p>
<p>Imagine receiving a call from your doctor, </p>
<p>Doctor: The kidney we gave you yesterday, yeah, we’re going to need that back.<br>
You: …
Doctor: You see, your health care only approves for 20 transplants this year. Incidently, you’re #21. We just didn’t know until we processed your file.<br>
You: …
Doctor: Btw, you can have your old kidney back. It was soaked in sodium silicate. Anyway, congratulation, we didn’t destroy it as per the health care rule.<br>
You: [hyperventilating]
Doctor: Make sure you come in before this weekend, fund might run out and there might not be enough Demerol to retrieve our kidney back.</p>
<p>Cash-for-clunkers was designed and authorized as a $4 billion program which probably would have been about right for the time period established for it, but to mollify some deficit-hawk Republicans and Blue Dog Democrats only $1 billion was appropriated for what everyone knew was a $4 billion program. It’s not that Congress “didn’t estimate costs” accurately, it’s just that some in Congress were too cheap to pay for the program they authorized. Granted, that’s a kind of political failure, but in this case an entirely foreseeable one.</p>
<p>As for health care, as Paul Krugman points out in today’s NY Times the government already “runs” a very large fraction of health care directly through Medicare—and in the aggregate, people on Medicare are MORE satisfied with their health care than those on private insurance plans. As for those of us on private insurance, we’re already the beneficiaries of a web of federal subsidies (e.g., tax deductability of employer-paid health plans, tax-deductable charitable status of many private hospitals) and regulations (e.g., rules prohibiting employers from denying coverage to employees with pre-existing conditions, and rules requiring employers to provide coverage to lower-wage employees if they provide it to highly paid employees). To a substantial degree, then, the government is ALREADY running health care, and footing a very large share of the bill. The question is not whether the federal government will be involved, but what we’ll get for that involvement.</p>
<p>Thank you for your comments – given what you say, yes this was a different kind of failuare. And how confident are we that congress will be honest with us about health care?</p>
<p>^^ chubeebo,
I think some of the media reports on cash-for-clunkers have been a little misleading. The program formally went into effect this week, but car dealers had been selling cars on the basis of cash-for-clunkers commitments since July 1, lining up the paperwork to submit this week. So the more accurate way to look at it is that the first $1 billion was committed in the first month of selling under the program, not in the first four days as was widely and misleadingly reported. And it doesn’t mean the next $2 billion will go that fast. Car dealers have been telling customers since July 1, “There’s only $1 billion in the program and it’s likely to be gone long before November when the program officially ends, so if you’re thinking about getting a new car in the fall you should probably buy now to take advantage of that $4500 before all the money is gone.” Thus to some extent they were front-loading what otherwise would have been fall sales into their July sales figures. So I’d expect the second $2 billion to go a little more slowly. </p>
<p>On the other hand, the media frenzy around the rapid disappearance of the first $1 billion has probably stirred up even more consumer interest in the program, and the fact that the first billion went so fast may create some additional panic-buying in the next week or two. That sort of mass consumer hysteria is hard to predict, and even harder to control once it gets started.</p>
<p>thanks for the clarification bclintonk. $1 billion… dang…, that’s a LOT of cars. let’s see, just out of curiosity and using my very rusty almost non-existent math skills… and just using the upper limit of $4500… 1 billion divided by 4500 is 222,222 cars. </p>
<p>Car dealers must have been really busy (and happy) these past few days.</p>
<p>The US usually had 10,000,000 car sales as the mark of a good year. So 222,000 is just a nice drop in the bucket. Even three times that is less than a 10th of a good year’s sales.</p>
<p>thanks barrons. That puts things in perspective. Is the 10 million all new car sales? If not, I wonder though, how many of that 10 million would be attributed to new cars for individual buyers, which is the program’s target. There would be corporate sales and international sales in that 10 mill number, plus pre-owned sales?</p>
<p>^^ Apparently the Ford Exploder 4x4 is the #1 ‘clunker’ traded in on this program.</p>
<p>This is well-deserved based on my experiences with my 1991 Exploder which was the least reliable vehicle I’ve ever owned and almost got me stuck in the middle of nowhere in the Borrego desert.</p>