TodayApril 16, 2022

Cash for Clunkers does have successes

CARS for Cash

I have a 1993 Lexus LS 400 sedan with 80,000 miles. According to nadaguides my car would be worth $5,062 on a trade-in and $6,537 if I sold it retail. I pay $90 a year for registration, $26 is tax-deductible. My insurance is another $70 a month.

The Lexus is in perfect shape. I keep it garaged at all times. The gold paint doesn’t have a noticeable ding or nick on it. When I wash it I wax it and clean the leather and the tires. Recently it had the oil and filter changed as well as the air filter.

My car would qualify for the Car Allowance Rebate System (CARS) program, but I won’t sell it. I don’t want the added expense. Besides, says my Lexus gets 18 mpg, but I get 20 mpg in my car.

If I were to buy a car it wouldn’t be a brand spanking new car. It would a used one, newer, but still used. For most people with an old car like mine, that is the case.

But what if I were to buy a car? How would that help me, my government and the Environment?

What does the government get out of C4C?

The Federal government would give me a $4,500 rebate because I would buy a car that gets at least 28 mpg, which is the requirement for the $4,500.

One doesn’t think about all the taxes and fees associated with buying a car, but there are plenty, especially in California. The California legislature can’t pass a tax without a 2/3 vote but they can still tack on fees.

Current Registration:                        31.00
Current California Highway Patrol:                   22.00
Current Vehicle License Fee:                          323.00
Current Fingerprint ID Fee:                             1.00
Current Smog High Polluter Repair Fee:                 6.00
Original Smog Abatement:                             6.00
Alt-Fuel/Tech Smog Fee:                             8.00
Current Auto Theft and/or DUI Crime Deterrence Program:        1.00
Current Air Quality Management District:                6.00
Alt-Fuel/Tech Reg Fee:                        3.00
Use/Sales Tax:                            2,310.00
Reflectorized License Plate Fee:                    1.00
Total Registration Fees:                         $408.00
Total Use/Sales Tax:                           $2,310.00
Grand Total Registration Fees:                   $2,718.00

I know that all cars won’t be sold in California and there are some states that don’t have sales tax. But for argument’s sake let’s say that they all were and that there were 225,000 sold in California.

That’s about $600 million of the $1 billion back right away!

60 cents on the dollar, into cities, counties, and states right away.

What about the customer?

2/3 of the cars being purchased in the CARS program are getting $4,500 – which means they meet the 10 mpg or more requirement.

The Department of Transportation says that the trade-ins are getting average 15.4 miles to the gallon. The cars they are buying are averaging 25.4 miles to the gallon. If you calculate this with 15,000 driven miles per year one will save about 300 gallons of gasoline, or about $900 a year.

SUVs are the leading trades with fuel-efficient vehicles like the Ford Focus, Toyota Corolla and Chevy Cobalt being the leading sellers.

What about the manufacturers?

General Motors Co. captured 18.7 percent of new sales, followed by Toyota Motor Corp. with 17.9 percent. Ford Motor Co. brought in 16 percent of the sales. The Detroit 3 represented 45.3 percent of the total sales while  Toyota, Honda, and Nissan accounted for 36.5 percent.

90 percent of Toyota’s CAR sales are conquests – meaning they turned in a different make of car. This makes sense – most of Toyota’s cars have always been fuel-efficient.

57 percent of Mazda’s cars being purchased under the program were Mazda3 – Mazda’s most fuel-efficient car. 24/32

California, Michigan, and Ohio were the top three states taking advantage of the program. So adjust the sales tax according to the state, but all of them have added “fees” attached.

More importantly, the cars on the dealer’s lots are disappearing. The average age of cars on a lot is 60 days. According to Automotive News the days supply of vehicles on the lot as of July 1, 2009, were:

July 1  June 1
Detroit 3                71      78
European               75      76
Japanese                56     54
Korean                   49     52
Total industry        64     67

Automotive News also estimated

Stock by maker
Days supply on July 1, 2009

1. Subaru 41
2. BMW 43
3. Toyota 47
4. Hyundai-Kia 49
5. Ford 57

1. Porsche 155
2. Jaguar Land Rover  132
3. VW Group 109
4. Suzuki 108
5. Mitsubishi 84

Ford says their days on the lot has gone from 57 on July 1, 2009, to 48 days on the lot as of August 5, 2009. At some point, manufacturers are going to have to ramp up production. This means more jobs.

Automotive News came out today, August 6, 2009, and said, “Preliminary inventory reports for Aug. 1 indicate unsold vehicles fell below 2 million unit’s“ the lowest figure since at least 1992 when the Automotive News Data Centerlight trucks.

The July 1 figure, 2.2 million units, already were the lowest monthly inventory mark since 1992. Because the annualized selling rate rose in July, inventories on a days-supply basis fell sharply. Chrysler Group shed 58,600 units last month or 30 percent, and its day’s supply fell to 40, from 71 on July 1.

Ford Motor Co.’s inventory slid to 48 days, from 57 on July 1. General Motors was at 64 days, down from 82; Toyota Motor Sales U.S.A. was at 29, from 47; and Hyundai-Kia was at 26 days, down from 49 began combining inventory figures for cars and .”

Perhaps when the government comes back in session they can have “cash for real clunkers”. That would be the pre-1983 cars, the cars without a catalytic converter.

Lou Ann Hammond

Lou Ann Hammond is the CEO of Carlist and Driving the Nation. She is the co-host of Real Wheels Washington Post carchat every Friday morning and is the Automotive, energy correspondent for The John Batchelor Show and a Contributor to Automotive Electronics magazine headquartered in Korea. Hammond is a founding member of the Women's World Car of the Year #WWCOTY, and board member of the Women in Automotive.