Q&A: How the 'cash-for-clunker' plan would work
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PostPosted: Tue, Jun 9 2009, 10:06 pm EDT    Post subject: Q&A: How the 'cash-for-clunker' plan would work Reply with quote

If you have an old car that is rated 18 mpg or lower, read on:

Q&A: How the 'cash-for-clunker' plan would work

Updated 5/15/2009 3:25 PM

By James R. Healey, USA TODAY

House Democrats and the Obama administration have agreed on a compromise for a so-called cash-for-clunkers bill.

Similar to European programs, the legislation — also called "fleet modernization" or "scrappage" — would provide federal vouchers of up to $4,500 for people to trade in their vehicles for new ones that get better mileage.

The European programs are expected to result in 400,000 to 500,000 more new vehicle sales this year than otherwise would be the case. Backers say a U.S. version could add 1 million sales at a time Chrysler is in bankruptcy court and General Motors is fighting to stay out. Both are operating on government loans.

Talk of the vouchers has kept some would-be new car and truck buyers on the sidelines, waiting to see whether they'd qualify for government help. So, for the moment, the idea is hurting sales. Based on interviews with lobbyists and congressional offices, how it might work:

Q: What's the idea behind "cash-for-clunkers"?

A: Supporters say it would replace older vehicles with new ones that use less fuel, are safer and pollute less. And it would give the struggling auto industry a sales boost.

Q: What's the bill's status?

A: It's in a House committee and backed by the president. Senators from both parties are prepared to co-sponsor similar legislation as soon as this week.

Q: Sounds like a sure thing.

A: Not so. Environmental lobbyists, who don't think it boosts fuel economy enough, might derail it or get it changed enough in the Senate that a compromise would take awhile.

Q: Any groups trying to keep it from being derailed?

A: You bet. Car companies, autoworkers, component suppliers and car dealers, among them. The House bill "will help jump-start auto sales and the U.S. economy, while also providing environmental benefits and increasing energy security," says Ziad Ojakli, Ford Motor spokesman.

Q: What's the price tag?

A: About $4 billion. The money is currently proposed to come from Energy Department funding included in the already enacted $787 billion economic stimulus package.

Q: If the House bill becomes law, how would it work?

A: The government would send up to $4,500 to the selling dealer on your behalf, if you:

1. Trade in a car that — this is a key point — has been registered and in use for at least a year, and has a federal combined city/highway fuel-economy rating of 18 or fewer miles per gallon.

2. Buy a new car, priced at $45,000 or less and rated at least 4 mpg better than the old one (gets a $3,500 voucher). If the new one gets at least 10 mpg better, you get the full $4,500.

Example: Trade that well-worn 1985 Chevrolet Impala V-8 police special, rated 14 mpg, for a 2009 Impala V-8 rated 19 mpg and the government will kick in $3,500. Downsize to Chevy Cobalt (27 mpg) or even a larger Honda Accord (24 mpg) and get $4,500.

Mileage ratings back to 1985 are at www.fueleconomy.gov.

Q: What about trucks?

A: It's more complicated.

For standard-duty models — most SUVs, vans and pickups:

1. The old one must be rated 18 mpg or less.

2. The new one must be at least 2 mpg better for $3,500 or at least 5 mpg better for $4,500.

For heavy-duties (6,000 to 8,500 pounds gross vehicle weight rating):

1. The old one must be rated 15 mpg or less.

2. The new one must be rated at least 1 mpg better for $3,500, or 2 mpg or more for $4,500.

Work trucks (8,500 to 10,000 lbs.) don't have mpg ratings, so age is the criteria. The old one has to be a 2001 model or older. And only $3,500 is available.

Q: Is it worth it for $4,500?

A: The assumption is that the people most likely to use the program would trade in cars worth less than $4,500. Thus, while not necessarily clunkers, most would be at least 8 years old.

Q: Can I combine these incentives with other offers?

A: Yes. For instance, you could trade for a hybrid and get the voucher, claim the hybrid tax credit and get dealer or manufacturer discounts. You also could deduct the sales tax, if any, on your next federal tax return.

Q: Would I ever see the $3,500 or $4,500?

A: No. It's an electronic transfer from the government to the dealer. Dealers want to be sure the amount can be counted as cash from the buyer, which would help buyers get credit because they're financing less.

Q: What does the dealer do with my trade-in?

A: Gives it to a salvage operator. The engine, transmission and some other parts must be destroyed so they can't be reused. The idea is to cull fuel-thirsty, polluting drivetrains. Operators can resell other parts, however.

Q: What's to keep me from buying a junkyard car for a few hundred bucks, getting it barely running and trading it?

A: The one-year-in-service requirement noted earlier. Lawmakers wanted to exclude the revival of so-called junkyard dogs, because they've already been taken off the road.

Q: What do I get if I recently bought a car that would have qualified?

A: The bill contemplates making the incentives retroactive to March 30, but it's unclear how to find and junk cars that were traded in that long ago. Some might already be back on the road, driven by new owners.

Q: What's wrong with environmentalists' idea that the new car or truck should get much better fuel economy than the House bill currently requires?

A: Opponents say the environmentalists' fuel-economy improvement thresholds are so high that foreign brands benefit disproportionately, because their lineups tend now to have more small, fuel-efficient vehicles.

But the American Council for an Energy-Efficient Economy complained in a statement criticizing the House bill that the proposal as it stands now is way too lenient.

The council charged that the bill "aims primarily to clear Detroit's unsold inventory from the storage lots," rather than to seriously cut fuel use.
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http://www.usatoday.com/money/autos/2009-05-11-chrysler-gm-cash-clunkers_N.htm
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PostPosted: Fri, Jun 12 2009, 12:45 am EDT    Post subject: Re: Q&A: How the 'cash-for-clunker' plan would work Reply with quote

Wouldn't NEW GM cars automatically qualify as clunkers??????????????
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PostPosted: Fri, Jun 12 2009, 6:40 am EDT    Post subject: Re: Q&A: How the 'cash-for-clunker' plan would work Reply with quote

Many cars manufactured in America, including many GM products, have been noted for quality, reliability and fuel economy in recent years.
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PostPosted: Fri, Jun 12 2009, 8:28 am EDT    Post subject: Re: Q&A: How the 'cash-for-clunker' plan would work Reply with quote

GM and Ford cars are quite popular in China.
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PostPosted: Sat, Jun 13 2009, 11:02 pm EDT    Post subject: Re: Q&A: How the 'cash-for-clunker' plan would work Reply with quote

Guest wrote:
Many cars manufactured in America, including many GM products, have been noted for quality, reliability and fuel economy in recent years.


Sure they are.
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Jersey Dad



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PostPosted: Sun, Jun 14 2009, 10:02 pm EDT    Post subject: Re: Q&A: How the 'cash-for-clunker' plan would work Reply with quote

Many of the purportedly "high quality imports" are also built in America. The truth is, with the support of the US government, the UAW is able to put more pressure on GM, Ford and Chrysler to pay higher wages and offer more benefits than their "import" competitors, while at the same time, foreign auto makers are encouraged to build cars and trucks in the US at substantially lower labor and legacy costs. While it is hard to condemn the UAW for negotiating the best deal for their members, the differential in labor costs is one key contributor to the current state of the US auto industry.

Unfortunately, another key contributor is the perception of quality. At this point, most independent measurements of quality put American cars on competitive footing with foreign brands. However, the perception persists (within the US) that American cars are lower quality. This misconception is costing thousands of American jobs (particularly in Detroit, the midwest and New York) and hurting the American economy. As an act of patriotism, I would encourage every America to learn the facts before passing judgement. Americans design, market and manufacture some of the best cars in the world. We should be proud of that.

JD
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PostPosted: Sun, Jun 14 2009, 10:11 pm EDT    Post subject: Re: Q&A: How the 'cash-for-clunker' plan would work Reply with quote

What a great idea. Why don’t they raise the amount to $50,000 and get rid of the mileage requirement. We could all get great new cars for free! Seriously, that $4 Billion dollars, like all the money the folks in Washington are spending, has to be forcibly taken from someone, either directly by taxation or indirectly by reducing the value of our earnings through inflation before it can be given to a more deserving soul. Stop the spending.
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PostPosted: Mon, Jun 15 2009, 9:16 am EDT    Post subject: Re: Q&A: How the 'cash-for-clunker' plan would work Reply with quote

JD, agree on your second point: contrary to popular percetions, the quality difference between a domestic car and an "imported" car is small at most. However, due to the cost structure in your first point, you are seeing new cars are priced at the same level for both US brands and foreign brands. After taking resale price into consideration, you actually pay more for a US domestic brand.
For the sake of patriotism, I would love to buy a US brand. As a consumer, however, I buy it only when the price is right. BTW, I drive both domestic and "imported" cars.
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PostPosted: Mon, Jun 15 2009, 11:26 am EDT    Post subject: Re: Q&A: How the 'cash-for-clunker' plan would work Reply with quote

Guest,
I agree with you. Purchasing decisions are a matter of personal choice. All I am suggesting is that patriotic Americans take a few minutes to learn the truth about American cars before perpetuating the myth of poor quality. For example, Buick is at the top of the JD Powers dependability rankings. My next car probably won't be a Buick, but it makes me feel good about GM quality (Mercury is #5 on the same list.)

As a point of interest, many American brands offer incentives that equalize the differential in labor costs and resale value. Also, resale values vary greatly depending on market conditions. For example, last year, used pick-ups were cheap and small cars and hybrids were grossly over-priced. This year is different. Plus, trade-in values vary significantly based on the negotiating skills of the buyer and seller. Something to consider in your purchasing process.
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Jersey Dad



Joined: Tue, May 20 2008, 11:02 pm EDT
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Location: Cranbury Estates

PostPosted: Mon, Jun 15 2009, 11:35 am EDT    Post subject: Re: Q&A: How the 'cash-for-clunker' plan would work Reply with quote

Guest wrote:
Guest,
I agree with you. Purchasing decisions are a matter of personal choice. All I am suggesting is that patriotic Americans take a few minutes to learn the truth about American cars before perpetuating the myth of poor quality. For example, Buick is at the top of the JD Powers dependability rankings. My next car probably won't be a Buick, but it makes me feel good about GM quality (Mercury is #5 on the same list.)

As a point of interest, many American brands offer incentives that equalize the differential in labor costs and resale value. Also, resale values vary greatly depending on market conditions. For example, last year, used pick-ups were cheap and small cars and hybrids were grossly over-priced. This year is different. Plus, trade-in values vary significantly based on the negotiating skills of the buyer and seller. Something to consider in your purchasing process.


Just to clarify, the above post is mine (Sorry, I forgot to login). JD
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PostPosted: Mon, Jun 15 2009, 12:18 pm EDT    Post subject: Re: Q&A: How the 'cash-for-clunker' plan would work Reply with quote

I couldn't agree more. However, the question is do you take the Ford made in Mexico or the Toyota made in Tennessee. I'd rather keep the laborers employed and take the Toyota. So it's important if you want to buy American to understand where the car is coming from and just because it has an American or Japanese name it does not mean it is an American or Japanese car.
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PostPosted: Thu, Jun 18 2009, 5:51 pm EDT    Post subject: Senate salvages 'cash for clunkers' program Reply with quote

Senate salvages 'cash for clunkers' program

$3,500 to $4,500 for motorists who trade gaz guzzlers for fuel efficient cars

WASHINGTON - Senate Democrats narrowly defeated a GOP effort Thursday to kill a $1 billion "cash for clunkers" program that would provide government incentives of $3,500 to $4,500 to motorists who trade in old gas guzzlers for more fuel efficient vehicles.

Auto state senators said the program would help hard-pressed car dealers by bringing buyers into showrooms, and they got help from President Barack Obama and Vice President Joe Biden, who made calls to wavering Democrats urging them to keep the plan alive.

"This is an emergency for families and small businesses — for an industry that has been the backbone of our economy for a generation," said Sen. Debbie Stabenow, D-Mich., who sponsored the proposal.
Story continues below ↓advertisement | your ad here

Opponents said it would increase the federal debt without doing much to get expensive-to-operate vehicles off the roads.
...
http://www.msnbc.msn.com/id/31432867/ns/politics-capitol_hill/
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PostPosted: Sat, Jun 20 2009, 11:55 pm EDT    Post subject: Re: Q&A: How the 'cash-for-clunker' plan would work Reply with quote

The official web site for the info is:

http://www.cars.gov

You can register your email there for updates.
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PostPosted: Sun, Jun 21 2009, 6:54 am EDT    Post subject: Re: Q&A: How the 'cash-for-clunker' plan would work Reply with quote

Doesn't anyone care that we are spending our kids and grandkids money to buy ourselves a car?
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PostPosted: Sun, Jun 21 2009, 8:27 am EDT    Post subject: Re: Q&A: How the 'cash-for-clunker' plan would work Reply with quote

The bill will be signed. It's a done deal.
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PostPosted: Tue, Jun 23 2009, 8:28 am EDT    Post subject: Re: Q&A: How the 'cash-for-clunker' plan would work Reply with quote

Call, write and/or email Holt, Lautenberg and Menendez and let them know it isn’t alright to keep spending our money. It’s the only way they will ever stop. I know this is a done deal but maybe we can stop the next one – and you know another one is coming.
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