The federal government kicked off its cash for clunkers program in July, offering some serious money to get old gas guzzlers off the road. If you were thinking a few hundred dollars to take some rusty lawn decorations off the hands of people who couldn’t be bothered to make a trip to the junk yard, think again: Under the now $3 billion Car Allowance Rebate System (CARS), owners of qualifying vehicles can get up to $4,500 to turn the vehicle in to a participating dealer who will destroy its engine to ensure it never sees asphalt again.
Clearly any program that will remove cars that fail to meet today’s strict vehicle emissions standards is good for the environment. But the timing of this program, in the midst of a historically deep recession that has devastated the U.S. auto industry, combined with the government’s commitment to invest a substantial amount, seem certain to make this program a winner on multiple fronts.
Some car makers are adding their own incentives on top of the government’s generous offer. Chrysler, for example, is matching the federal rebate dollar for dollar for any consumer shopping for a new car. How can it afford to? The answer, it seems, is that it can’t afford not to. This story reports that, in addition to slow sales, U.S. carmaker inventories are bloating as a result of lease turn-ins: More than half of those people who have turned in leased General Motors vehicles in recent months have not replaced them.
Now, it looks like that trend might finally start to reverse as the government rebates and added dealer incentives make spanking new cars affordable to many people who were previously priced out of the market by a long shot. PriceWaterhouseCoopers thinks the program could generate 200,000 new car sales in the U.S.
None of this means that the program is flawless. Critics have disputed everything from the amount being paid for those old clunkers to the qualifying criteria. Some 20-year-old cars don’t make the cut, while relatively new models do. The online car buying guide Edmunds.com calculates that the new car sales that are generated through the program will cost American taxpayers $20,000 apiece. Other forecasts that predict much broader participation calculate a much lower cost per car turned in.
More to the point, however, Cash for Clunkers, and all the consumers and car dealers lining up to participate, shows that it is possible to serve different causes at the same time.
Commuting to work in a comfortable car doesn’t have to be at odds with serving the planet.