atprm
04-07-2009, 06:13 AM
( http://online.wsj.com/article/SB123906277621795227.html#mod=todays_us_nonsub_pj )
Uncle Sam wants your old gas-guzzling SUV. But he may be low-balling the price.
Now that President Barack Obama and Congress are in the auto business, the interests of Detroit and Washington are lining up in ways Americans have never seen before. One result of this 21st-century twist on the old line about "what's good for General Motors" is a flurry of interest on Capitol Hill in the idea of a government-funded "cash for clunkers" program.
Mr. Obama supported the idea of offering consumers a bonus to scrap their old guzzlers in a speech on the government's plans for restructuring General Motors Corp. and Chrysler LLC. Mr. Obama also cheered industry officials by saying he wants any scrapping-bonus plan to be made retroactive to March 30. The last thing auto makers need is for the president to give consumers another reason to delay buying a new vehicle.
The White House, Congress and the industry are in broad agreement: Without some action to lift auto sales from their current dismal levels, all auto makers in the U.S. will suffer. Ford Motor Co.'s effort to restructure without government loans is threatened unless sales get back above a pace of 11 million to 12 million a year, compared to under 10 million a year so far this year. The government's loans to GM and Chrysler are at risk, too, unless sales ascend to a higher level.
The cash-for-clunkers proposals circulating in Congress vary. But the basic concept is represented by a plan backed by U.S. Rep. Betty Sutton (D., Ohio). Her bill would offer bonuses starting at $3,000 for someone who scraps a 2001 or older model for a U.S.-made car that gets 27 miles per gallon on the highway. Buyers of a U.S.-made car that gets 30 mpg on the highway could get $5,000.
Dumping a "clunker" to get a new U.S.-made truck that gets at least 24 mpg on the highway would make you eligible for a $4,000 payment under Ms. Sutton's proposal. Businesses that buy a "work truck" that is cleaner than the vehicle replaced based on federal emissions testing could get $5,000 -- so long as the truck is registered in the name of a business.
Consumers shouldn't get hung up on the details of Ms. Sutton's proposal or any of the others now under discussion. The horse-trading on the exact parameters of a cash-for-clunkers program has just begun, and the auto industry's main trade association in Washington, the Alliance of Automobile Manufacturers, has yet to weigh in. Spokesman Charles Territo says the group will call for a plan that doesn't discriminate against foreign-made vehicles. Writing too strong a preference for U.S.-made vehicles into the program could also get the U.S. in trouble with trading partners and the World Trade Organization.
But never mind the WTO. The real problem could be that for a lot of people now riding around in SUVs acquired during the waning days of the dot-com bubble -- remember that? -- a $3,000 or $5,000 tax-funded payment is worth less than their truck could fetch in a conventional trade-in or private sale.
If I owned a 2000 Ford Explorer Eddie Bauer all-wheel-drive model equipped with a 5.0 liter V-8 -- a popular configuration that year -- I would be getting about 15 mpg or less in daily driving. This is exactly the kind of vehicle Mr. Obama wants retired to the junkyard. But if Mr. Obama was a car dealer, I'd want him to give me as much as $5,300 for my old Explorer, based on the used vehicle trade-in values at Edmunds.com, an auto-shopping Web site.
An even-thirstier vehicle is the Ford Expedition. Last summer, you could barely give away these nearly three-ton, V-8 powered beasts. Now, Edmunds says a 2000 Eddie Bauer four-wheel drive Expedition -- rated at 13 mpg -- could have a trade-in value of as much as $7,473.
The impact of a government-backed program to turn guzzlers into cash and new car sales could depend as much on psychology as on financial calculations. Psychologically, auto makers want the government to fund such a program in part because it could represent a big "buy" signal that gets consumers off their couches. In Germany, a cash-for-clunkers bonus of €2,500 ($3,350) has touched off a buying frenzy, something that doesn't happen too often in that country's restrained consumer culture.
But prying Americans out of their paid-off SUVs may require more than offering a fraction of the vehicle's trade-in value -- and that means more public money.
True skinflints also know it's almost always cheaper to keep a vehicle that's paid off and not suffering from expensive mechanical problems than it is to sign up for a new-car loan.
I am the owner of an 11-year-old Toyota Camry, and I judge its value two ways: What I could get if I sold it, and what it would cost to replace it. If I sold it, I might get $2,000 to $2,500, according to Edmunds. To replace it with a comparable new vehicle could cost me $20,000 or more.
What's more, my old Camry is too efficient to qualify as a "clunker," at least under Ms. Sutton's definition. So until Congress is prepared to offer tax-funded bonuses to rid the nation of ugly cars, I may just have to sit tight.
Write to Joseph B. White at joseph.white@wsj.com
So what about the vehicles that get less than 27 mpg?? IMO, THOSE are the ones that need better vehicles -- what real good in the long run does turning in one that gets 27 on the freeway to receive 30 on the freeway do? Sounds to me like Poppa O is "taking care" of his new pets...
Uncle Sam wants your old gas-guzzling SUV. But he may be low-balling the price.
Now that President Barack Obama and Congress are in the auto business, the interests of Detroit and Washington are lining up in ways Americans have never seen before. One result of this 21st-century twist on the old line about "what's good for General Motors" is a flurry of interest on Capitol Hill in the idea of a government-funded "cash for clunkers" program.
Mr. Obama supported the idea of offering consumers a bonus to scrap their old guzzlers in a speech on the government's plans for restructuring General Motors Corp. and Chrysler LLC. Mr. Obama also cheered industry officials by saying he wants any scrapping-bonus plan to be made retroactive to March 30. The last thing auto makers need is for the president to give consumers another reason to delay buying a new vehicle.
The White House, Congress and the industry are in broad agreement: Without some action to lift auto sales from their current dismal levels, all auto makers in the U.S. will suffer. Ford Motor Co.'s effort to restructure without government loans is threatened unless sales get back above a pace of 11 million to 12 million a year, compared to under 10 million a year so far this year. The government's loans to GM and Chrysler are at risk, too, unless sales ascend to a higher level.
The cash-for-clunkers proposals circulating in Congress vary. But the basic concept is represented by a plan backed by U.S. Rep. Betty Sutton (D., Ohio). Her bill would offer bonuses starting at $3,000 for someone who scraps a 2001 or older model for a U.S.-made car that gets 27 miles per gallon on the highway. Buyers of a U.S.-made car that gets 30 mpg on the highway could get $5,000.
Dumping a "clunker" to get a new U.S.-made truck that gets at least 24 mpg on the highway would make you eligible for a $4,000 payment under Ms. Sutton's proposal. Businesses that buy a "work truck" that is cleaner than the vehicle replaced based on federal emissions testing could get $5,000 -- so long as the truck is registered in the name of a business.
Consumers shouldn't get hung up on the details of Ms. Sutton's proposal or any of the others now under discussion. The horse-trading on the exact parameters of a cash-for-clunkers program has just begun, and the auto industry's main trade association in Washington, the Alliance of Automobile Manufacturers, has yet to weigh in. Spokesman Charles Territo says the group will call for a plan that doesn't discriminate against foreign-made vehicles. Writing too strong a preference for U.S.-made vehicles into the program could also get the U.S. in trouble with trading partners and the World Trade Organization.
But never mind the WTO. The real problem could be that for a lot of people now riding around in SUVs acquired during the waning days of the dot-com bubble -- remember that? -- a $3,000 or $5,000 tax-funded payment is worth less than their truck could fetch in a conventional trade-in or private sale.
If I owned a 2000 Ford Explorer Eddie Bauer all-wheel-drive model equipped with a 5.0 liter V-8 -- a popular configuration that year -- I would be getting about 15 mpg or less in daily driving. This is exactly the kind of vehicle Mr. Obama wants retired to the junkyard. But if Mr. Obama was a car dealer, I'd want him to give me as much as $5,300 for my old Explorer, based on the used vehicle trade-in values at Edmunds.com, an auto-shopping Web site.
An even-thirstier vehicle is the Ford Expedition. Last summer, you could barely give away these nearly three-ton, V-8 powered beasts. Now, Edmunds says a 2000 Eddie Bauer four-wheel drive Expedition -- rated at 13 mpg -- could have a trade-in value of as much as $7,473.
The impact of a government-backed program to turn guzzlers into cash and new car sales could depend as much on psychology as on financial calculations. Psychologically, auto makers want the government to fund such a program in part because it could represent a big "buy" signal that gets consumers off their couches. In Germany, a cash-for-clunkers bonus of €2,500 ($3,350) has touched off a buying frenzy, something that doesn't happen too often in that country's restrained consumer culture.
But prying Americans out of their paid-off SUVs may require more than offering a fraction of the vehicle's trade-in value -- and that means more public money.
True skinflints also know it's almost always cheaper to keep a vehicle that's paid off and not suffering from expensive mechanical problems than it is to sign up for a new-car loan.
I am the owner of an 11-year-old Toyota Camry, and I judge its value two ways: What I could get if I sold it, and what it would cost to replace it. If I sold it, I might get $2,000 to $2,500, according to Edmunds. To replace it with a comparable new vehicle could cost me $20,000 or more.
What's more, my old Camry is too efficient to qualify as a "clunker," at least under Ms. Sutton's definition. So until Congress is prepared to offer tax-funded bonuses to rid the nation of ugly cars, I may just have to sit tight.
Write to Joseph B. White at joseph.white@wsj.com
So what about the vehicles that get less than 27 mpg?? IMO, THOSE are the ones that need better vehicles -- what real good in the long run does turning in one that gets 27 on the freeway to receive 30 on the freeway do? Sounds to me like Poppa O is "taking care" of his new pets...