New legislation would give people up to $4500 if they trade in a gas guzzler. Here's the AP story.
In part:
Observations:
- If you can get a $3000 "transit fare credit," then it sounds like you don't need to purchase a replacement vehicle at all in order to get this money/benefit.
- This will have the short term effect of depressing auto sales as people wait to see what the final legislation looks like. Dealers sure don't need that.
- Will car prices just jump by some portion of the credit amount? That's the usual pattern with targeted rebates (e.g. the government rebate for hybrids--when the rebate ended, the prices went down). Because this is less direct, I'd imagine the price bump-up will be less as well.
- There's money to be made! Buy a bunch of wrecked/flood damaged, 2002 or newer vehicles and get 'em running (they don't need to run well, at least in my state, the DMV doesn't inspect cars when you register them. It's not clear who would determine the vehicles were "drivable").
Then sell them to people looking for a new car--it would be worth up to $4500 to them. This is the behavior that Congress is incentivizing.
- The story doesn't say what happens to the cars turned in. If they are re-od, then there's no reduction in gas use. If they are not put back into service, then the law will result in some degree of increased energy use as these older (ostensibly serviceable) cars are melted down and re-formed into vehicles. The embodied energy bound up in a car is tremendous, and crushing cars, even ones that get poor mileage, if they can still be useful will not necessarily save fuel.
Another helpful idea from Congress. After all, apparently it is the unused vehicles sitting in the driveways that are burning up the gasoline. If they want to reduce gasoline use and get us to purchase fuel efficient cars--why not raise the gas tax (and reduce other taxes commensurately--ha, ha!)
In part:
I heard a news commentator saying that one thing delaying this bill was that Congress was trying to find a way to favor purchase of American-built (??) cars, but without triggering retribution from overseas. Good luck with that.Drivers would be eligible for reimbursement for purchase of a new or used vehicle with a fuel economy rating that exceeds federal targets for that class of vehicle by at least 25 percent. The vehicle must have a manufacturer suggested retail price of less than $45,000 and be a model year 2004 or later.
The vehicles turned in must be drivable, registered in the United States and have a when-new fuel economy rating of less than 18 miles per gallon.
In the first year of the program, a person trading in a vehicle that is model year 2002 and later would be eligible to receive $4,500 for purchase of a new vehicle, $3,000 for purchase of a used vehicle or $3,000 for transit fare credit. For model year vehicles 1999 to 2001, drivers would get $3,000 for the purchase of a new vehicle. Those who trade in vehicles that came out in 1998 or before could get a credit of $2,000 for a new vehicle.
Observations:
- If you can get a $3000 "transit fare credit," then it sounds like you don't need to purchase a replacement vehicle at all in order to get this money/benefit.
- This will have the short term effect of depressing auto sales as people wait to see what the final legislation looks like. Dealers sure don't need that.
- Will car prices just jump by some portion of the credit amount? That's the usual pattern with targeted rebates (e.g. the government rebate for hybrids--when the rebate ended, the prices went down). Because this is less direct, I'd imagine the price bump-up will be less as well.
- There's money to be made! Buy a bunch of wrecked/flood damaged, 2002 or newer vehicles and get 'em running (they don't need to run well, at least in my state, the DMV doesn't inspect cars when you register them. It's not clear who would determine the vehicles were "drivable").
Then sell them to people looking for a new car--it would be worth up to $4500 to them. This is the behavior that Congress is incentivizing.
- The story doesn't say what happens to the cars turned in. If they are re-od, then there's no reduction in gas use. If they are not put back into service, then the law will result in some degree of increased energy use as these older (ostensibly serviceable) cars are melted down and re-formed into vehicles. The embodied energy bound up in a car is tremendous, and crushing cars, even ones that get poor mileage, if they can still be useful will not necessarily save fuel.
Another helpful idea from Congress. After all, apparently it is the unused vehicles sitting in the driveways that are burning up the gasoline. If they want to reduce gasoline use and get us to purchase fuel efficient cars--why not raise the gas tax (and reduce other taxes commensurately--ha, ha!)