Categories: The Green Room

Cash for Clunkers

Ford Motor Co. has asked the Canadian government to provide a $3,500 incentive to…

by Alex Shimo on Tuesday, March 10, 2009 8:12pm - 12 Comments

Ford Motor Co. has asked the Canadian government to provide a $3,500 incentive to consumers who buy a new car in 2009. The initiative is supposed to stimulate the flagging auto-industry, and get older vehicles off the road. Ford CEO David Mondragon said they would be replaced by cleaner and safer vehicles.

The scheme has been sold as a win-win: good for the environment and economy. Based on the German model, it will likely stimulate the car industry – in Germany, car sales are up 22 per cent from the year before, and are at their highest level in 10 years. The scheme is so successful that many other countries are thinking of implementing something similar - Britain says a cash incentive scheme is on the horizon, and France, Italy and Spain all offer a similar cash for clunkers program. In the US, a similar proposal didn’t make it into the stimulus package, but has strong support from many in Congress.

The European experience suggests the program is good for job creation. Whether it’s good for the environment is another matter. While emissions of newer cars are lower than older cars – they aren’t that much lower. Between 1987 – 2005, fuel efficiency improved by 24 per cent. Which adds up to an approximate improvement of 1.3 per cent per year, depending on the age of your car. When you factor in the carbon cost of producing a new car, you can see that it’s only going to make a real difference to your vehicle emissions if you have a very old clunker and you buy a very clean, green car. The problem is the people who own clunkers are generally not about to buy a brand new vehicle, even with the incentive. If you have a rust bucket, it’s most likely because you are cash-constrained, and government cash will only take you so far. Considering all these factors, many greenies say this isn’t really going to help the environment much at all. One worked out the cost of the incentive, and said you’d get as much value for money by reclassifying dollar bills as biomass and burning them in power stations. Would that be green power? One can only guess.

Tags: Cash for clunkers, David Mondragon, emissions, Ford, fuel efficiency

More by Alex Shimo

Mike T.

Incidentally, the suggested rebate would cover a transit pass in Canada’s largest city for a period of almost three years.
madeyoulook

I vaguely recall a story that the choice (purely for the environment) between buying a shiny new Prius and buying a four-year-old just-about-anything was a hands-down no-brainer: buy used and drive it into the ground, maximizing the use of whatever resources went into its original production. Creation and transport of a Prius to your local showroom used up enough resources to blow away any marginal benefit to the environment achieved by driving it. Magnify this differential massively for any gas-guzzling non-Prius.
But, then, Ford doesn’t want you to know that. Ford wants you to throw away any vehicle already bought off its lot, and have the next generation subsidize a new purchase right now.
Pass.
Bill Simpson

How can transferring money from all taxpayers to a subset of the population for the purpose of buying an item that they have no need or want for at its market value improve the economy? How can this “create” jobs? It is a direct transfer of money to Ford to subsidize their factories.

I don;t how this nonsense even gets a hearing.

madeyoulook

Correction, Bill: we’d be transferring money from tomorrow’s taxpayers. That’s how it creates jobs now, by stealing wealth from the future. And it is an indirect transfer of money to Ford to subsidize their factories.
Totally agreed that this nonsense deserves no hearing. But then, neither did the already-introduced immoral “bailout” of GM & Chrysler. Look for Ford’s idea to get a thorough consideration soon in the halls of power.

bill arps

try getting an answer about leasing.My son went in himself and GAVE Rose city ford his YJ ,they allowed $6,000 and than added $1,760 for lease maitenance ,and he paid $587 a month for 36 months.So he put 111,000 kms on vehicle ,so they want $5,000 extra when turning in lease.So i thought lets purchase the Escape but they want $17,000-$19,000 buyout,and bank won’t loan that much,because theres 2006 escapes selling at Ford dealers between $9,000-$12,000 so to DAVID MONDRAGON $3,500 so your company can screw customers like this .
http://cash-for-clunkers.com/ Imee

I’m one of those people that liked the idea of the gas guzzler trade program in the US, mainly because of it being a “green” program… The fact that it was a success in Germany made it all the more convincing. I’m not sure if it will be the perfect thing for the US, and as you mentioned it was scrapped in the stimulus package. I hope it works out for Canada, it will certainly make your economy better, increase jobs and sales, and clean the environment.
http://cash-for-clunkers.com/ Imee

So Canada’s now also in on the Cash for Clunkers program? Great. If it worked in Germany and doing pretty well in other countries, I don’t see why it should fail in North America. It’s for a good cause anyway–influencing better trade and manufacturing, plus jobs and a cleaner environment.
http://earthfriendly-recycle.blogspot.com/ crazyskates

Originally when I heard of the idea about the “trade” of ones clunker for a new “environmentally friendly” car or truck, I thought it was a great idea. Having read your blog about the carbon footprint that would be left by the creation of a new vehicle and what little extra benefit the new vehicle would generate hardly seems worth it.
robb

being green is all well and good but there are still those who for some reason or other will still not be able to do this program for various reasons. For example bad credit no credit and high risk loan
Then there are others who need the gas guzzler for a reason, just picture this a smal fuel effecient car pulling a air stream ??? not likely.I use a 1979 ford 3/4 ton for my business because it has a 460 cu in engine and will carry a big load all day but empty or full I get same mileage 12 MPG and yes it polutes.
Is there anything out there in todays market that has the power and load capabilities that my truck has yes there is and they get a little better mileage 22 MPG and will haul less payload and will not last as long because there are to many parts that will go faulty
once again to me green is good for some purpose but others it doesnt match up
TJ Cook

Between 1987 – 2005, fuel efficiency improved by 24 per cent.

This is a notoriously tricky statistic. I’m going to speculate that it’s based on average consumption across all car models in the market each year. Whether it includes “light trucks” (ie SUVs) is a major variable. And if it does include light trucks/SUVs, the really critical variable is whether it’s calculated in proportion to the number of each model sold.

The overall average fuel economy was grossly misleading for a long time, and may still be, since it failed to reflect the huge numbers of gas-guzzlers sold in North America vs. small numbers of small cars.

This is pure greenwashing. I have a well-maintained 10-year-old car that barely registered NOx on its recent emissions test (it was a tenth the allowable maximum). It uses no more gas now than it did when new. There’s no environmental gain to scrapping this complex machine in favour of building a new one, especially considering the huge investment of energy and raw materials required.

Cars used to be good for 3-5 years and would decline steadily from day 1. Today, even the cheapest cars have mature electronic engine controls, fuel injection and effective smog controls. If politicians want to buy cars to keep people working (heck, they do it for farmers’ products), fine. But there’s no way they should be able to mask that in a green cloak.
LeenieJ (imho)

“greenwashing” i like that.
LeenieJ (imho)

hmmm. this program means a person has to go into *debt* doesn’t it?