The Car Rebate Redemption System ( CARS ), colloquially known as " cash for clunkers ", is a $ 3 billion federal scrappage program The US is intended to provide economic incentives for the US population to purchase new, more fuel-efficient vehicles while trading in fuel-efficient vehicles. The program is promoted as providing stimulus for the economy by increasing car sales, while placing safer, cleaner, and more fuel-efficient vehicles on the road.
The program officially began on July 1, 2009, claims processing begun July 24, and the program ended on August 24, 2009, as the required funds were exhausted. The deadline for dealers to apply is August 25th. According to Department of Transport estimates, the initial $ 1 billion for the system expired on July 30, 2009, well before the expected end date of November 1, 2009, due to extremely high demand. In response, Congress approved an additional $ 2 billion.
A study by researchers from the University of Delaware concluded that for every vehicle trade, the program has a net cost of about $ 2,000, with total costs exceeding all benefits of $ 1.4 billion. A study in 2017 at the American Economic Journal found that the program, aimed at increasing consumer spending, reduced total new vehicle expenditures by $ 5 billion.
Video Car Allowance Rebate System
Legislative history
Economist Alan Blinder helped popularize the idea of ​​a scrappage program, and a moniker "cash for clunker", with a snippet in 2008 in the New York Times. Blinder argues that the cash-for-clunkers program will have tripartite goals to help the environment, stimulate the economy, and reduce economic imbalances.
Some organizations advise Congress on developing programs including ACEEE, CAP Action Fund and SmartTransportation.org.
Jack Hidary of Smart Transportation and Bracken Hendricks of the Center for American Progress wrote a paper distributed to Congressional offices in November 2008 explaining the benefits of the cash-for-clunkers program.
The House of Representatives approved the creation of a cash-for-clunkers program with 298 to 119 sections of the CARS Act ("Consumer Assistance for Recycling and Rescue Act", H.R. 1550). The bill of the House of Representatives, sponsored by Rep. Betty Sutton (D-Ohio), allows consumers to trade in vehicles with combined fuel economy of 18 or less for new, more efficient vehicles. In the Senate, Debbie Stabenow (D-Michigan), and Sam Brownback (R-Kansas) are sponsoring a bill very similar to the House.
Alternative bill proposed by Dianne Feinstein (D-California), Susan Collins (R-Maine), and Charles Schumer (D-New York) will have a greater focus on improving fuel economy. Proponents argue that the alternative bill will lead to a 32% improvement in efficiency over the House-Stabenow-Brownback program version. The alternative bill would require a trade-in vehicle to have a fuel economy rating of 17 mpg -US (14 L/100 km; 20 mpg -imp ) or less and offer a triple coupon system the starting rate of $ 2,500 for the new car is 7 mpg -US (34Ã, L/100Ã, km; 8.4 mpg -imp ) more efficient than trade-in to $ 4,500 for the 13 mpg -US (18Ã, L/100Ã, km; 16 mpg -imp ) is more efficient. Less mileage requirements will be required for light and heavy duty trucks. Pre-1999 work trucks will qualify for $ 2,500 vouchers regardless of mileage improvement. The alternative bill also provides $ 1,000 vouchers for more efficient used car purchases; The House bill completely excludes used vehicles.
In the Senate, cash-for-clunkers legislation is incorporated into larger additional warfare financing laws. Dissenting Senators lift point of order under Rule 28, which prohibits the insertion of provisions not previously passed by one of the houses into the conference report. The ruling was overridden with 60 votes, though some senators, including Sam Brownback, felt uncomfortable with last-minute changes calling for bill financing to come from "deficit spending" rather than from an initially agreed stimulus package. The larger funding bill was passed by votes from 91-5 in the Senate.
The Supplemental Appropriations Act, 2009 was signed into law with the Consumer Relief Program for Recycling and Save (C.A.R.S.) as Title XIII. The program receives a $ 1 billion initial allocation (out of a $ 4 billion estimated cost) funded by the US government and the program period is July 1st - November 1st. This is implemented by the National Highway Traffic Safety Administration (NHTSA) which has 30 days of billing approval to post all program details online.
Responding to the US Department of Transportation estimating that the $ 1 billion fit for the system is running low on July 30, 2009, due to very high demand, Congress approved an additional $ 2 billion for the program with explicit support from the Obama Administration. On July 31, 2009, the House of Representatives approved an additional $ 2 billion for the program, and the Senate approved the extension on August 6, defeating all six amendments presented. President Barack Obama signed the bill into law on August 7, and his appropriation runs out on August 24, 2009.
Maps Car Allowance Rebate System
Feasibility criteria
- Vehicles must be less than 25 years old on the trade-in date.
- Only purchases or at least 5 years of eligible new vehicle rentals.
- Generally, traded vehicles should earn weighted average combined ratings of 18 or fewer miles per gallon (some very large pickup trucks and cargo cars have different requirements).
- Trade vehicles must be registered and insured on an ongoing basis for the full year prior to trading.
- Vehicles in trading must be in a driving condition.
- This program requires the removal of a qualified trade-in vehicle and that the dealer discloses to the customer the estimated value of the trade-in memo. The value of the memo, however minimal, would be an addition to the rebate, and not in exchange for a rebate.
- The new car purchased under the plan should have a suggested retail price of no more than $ 45,000, and for passenger cars, the new vehicle must have a combined fuel economy value of at least 22 mpg -US (11 L/100 km; 26 mpg -imp ).
Last minute car's inability
According to USA Today , the US Environmental Protection Agency (EPA) revised its estimated mileage list just before the start of the Car Rebate Disposal System program.
For example, the 1991 Dodge Grand Caravan is listed below as not eligible because the 1991 Dodge Grand Caravan with a 4 cylinder engine has a combined EPA 19 and unqualified mileage; However, the V3 engine 3.3Ã, L and 3.8 L in this vehicle has a combined EPA of 18 mileage and thus qualifies. The changes made some of the following cars with certain unqualified engine configurations:
The EPA "does not give a reason that its ratings are inaccurate or why some are up", according to USA Today . Karl Brauer, editor-in-chief of Edmunds.com, said, "It is unfortunate that consumers who have researched and planned to trade in their vehicles... are now left in the dust". "Consumers acting in good faith should not be punished for secret and last-minute changes made by the government", Kevin Smith, editor-in-chief of Edmunds.com, said in a statement.
The US Department of Transport decides that transactions involving cash-for-clunkers trade-ins based on old EPA mileage numbers and refined before July 24 will be honored, but the deal was reached after July 24 on vehicles that became unqualified as clunkers due to the mileage change rating will not be respected.
Credit
Depending on the type of car purchased and "the difference in fuel economy between the purchased vehicle and the trading vehicle", the amount of credit given in the form of vouchers to qualified customers is $ 3,500 or $ 4,500. A new car dealer will be able to reduce the purchase price by the number of vouchers to which the customer qualifies.
Lack of machine and scrappage criteria
To ensure that vehicles traded under "cash for clunkers" will not be resold by dealers, the program outlines the procedure for destructively destroying engines (and hence also prevents the possibility that any mechanical engine component can be saved for use in other vehicle repairs) : motor oil is dried and replaced with sodium silicate solution, then the machine is turned on and run until the solution, becomes like a glass when heated, causing the internal machine to scrape and eventually seize. In addition, salvage or scrap facilities that acquire vehicles can not sell engines, cylinder heads or "rolling chassis" of used vehicles. Residual or used facilities may sell other components (including transmissions and axles) from used vehicles separately and may disassemble and store parts thereof. The "hull" vehicles must be destroyed within 180 days. Cut off or unbolt front end assemblies can be stored and sold at a later date, as well as "up and back" from the pickup cabin.
The procedure outlined says that running a machine at 2,000 RPM "should turn the engine off in minutes"; if not, then let the machine cool before repeating the procedure. Dangers associated with intentional engine heating and destruction include rupture of radiators and hot water/steam, motor oil, toxic fumes, and fire.
By completely disabling the machine, the CARS program avoids the recycling schemes as found in Germany, where authorities have found that some 50,000 disposed vehicles have been exported to Africa and Eastern Europe, where newer and safer cars of the type destroyed in West is very expensive, Unlike US programs, the German program only requires dealers to lower the vehicles dumped in junkyard, thus allowing illegal exports.
Recyclers and auto-dismissal have criticized the program due to the requirement that the machine should be disabled to prevent reuse of the car. For automatic recyclers, car engines are regarded as the most valuable part of the car being discarded. Some recyclers have refused to participate in the program as well because of the limited profit potential of emptying cars carried under the CARS.
National Motor Vehicle Title Information System
After Hurricane Katrina, vehicles declared as total losses in one country were transferred to another country and resold to unsuspecting consumers with a net degree. To avoid clunkers declared under the CARS program that can also find their way back to the used car market in a tacit fashion, the federal government regulates the National Motor Vehicle Title Information System (NMVTIS) to track total vehicles and prevent their resale. In October 2009, 28 state motor agencies participated or contributed to NMVTIS, and 11 others worked to participate. All countries are required to fully participate on January 1, 2010.
The CARS program requires recyclers to report Vehicle Identification Number (VIN) and clunker status to NMVTIS within seven days of obtaining the vehicle. The searchable database (with a fee) contains information about vehicles from insurance companies, junkyards, and dive yards.
Program results
Auto Observer says there is one major technological error in this program. "Government officials said public sites for customers and sites for dealer registrations are on the same server, which becomes overloaded.The site is downgraded [night 24 July 2009] while the two functions should be segregated and put on two different servers", Auto Observer reported. Dealers also have trouble getting documents processed. Given the uncertainty paid, the dealer decides to wait to destroy the old car.
On July 29, $ 150 million from $ 1 billion was already spent on new purchases. Dealers have a higher volume of potential customers, in part because of other incentives offered by manufacturers and sellers. Some dealers believe that the increase is only temporary. However, many people who visit car dealers know that their cars are not eligible, but they still buy cars. Many people can participate in buying, but their trading value jumps significantly. According to House Speaker Nancy Pelosi, the car purchased has a mileage higher than the required bill.
The National Highway Traffic Safety Administration reported 23,000 participating dealers. Stabenow said 40,000 cars had been sold and 200,000 other sales were unfinished. Sutton Nichole Chief of Staff Francis Reynolds said, "The program has spent $ 150 million and has $ 800 million to $ 850 million in (pending) obligations.... This is one program you can actually see working". Rep. Candice Miller (R-Mich.) Said, "It has exceeded everyone's expectations". Miller and Sutton want to spend a total of $ 4 billion for this program. Bailey Wood, director of the National Auto Dealers Association legislature, said, "Clearly this program has been a huge success in driving automotive sales".
On July 30, Wood announced the suspension of the program. White House press secretary Robert Gibbs denied this was happening, saying that the government "evaluates all options". Dealers who aggressively advertise a program can not simply stop the ads, so there is concern about whether the program will continue. According to Department of Transport estimates, the $ 1 billion adjusted for the system expired on July 30, 2009, well before the expected end date on November 1, 2009, due to extremely high demand. The House of Representatives received another $ 2 billion for the program on July 31, with the Senate adding approval a week later. President Barack Obama signed the bill into law on August 7, and government officials hope that additional funding will be exhausted on Labor Day.
Former Federal Reserve chairman Alan Greenspan told ABC's This Week that the success of the program was due to the wait for the economy to improve. He said, "If... the clunker program has been done six months ago, it may no longer be useful". Greenspan does not believe the program has stimulated the economy.
On Aug. 3, the DoT reported from a sample of 120,000 rebate applications already processed, that "the average mileage of the car purchased was 28.3 miles per gallon, for SUV 21.9 miles per gallon, and for trucks, 16.3 miles per gallon, all significantly higher than needed to get a rebate ". Senator Susan M. Collins said that "vehicles purchased under the program will have an average of 9.6 more miles per gallon than the reversed, which he says is a 61 percent increase".
DoT also reports that "Ford, G.M. and Chrysler supply 47 percent of new vehicles, slightly more than their overall market share of 45 percent." Detroit Big Three producers said the peak demand in the last week of July left their inventory of unsold vehicles at the lowest level in years, but the windfall could hurt sales of some popular models in August. Ford sales rose in the United States for the first time since 2007, while GM and Chrysler at least improved by slowing their decline.
After the program's first week, the Department of Transportation reported that the average fuel-efficiency trade was 15.8 mpg -US (14.9 L/100 km; 19.0 mpg - imp ), compared to 25.4 mpg -US (9.3 L/100 km; 30.5 mpg -imp ) for new cars purchased for replacing them, translating to a 61% fuel efficiency improvement. DoT also commented that program participants downsized, rather than making one-on-one replacements, and spun their old trucks and SUVs for new small sedans, as 83% of the trade-ins are trucks, and 60% of new purchases are cars. On August 3, 2009, the top trade-in is the Ford Explorer 4WD and the best-selling car is the Ford Focus. However, according to an analysis conducted by Edmunds based on a sample of transactions between July 24 and July 31 (first week of the program), the Ford Escape crossover SUV is the best real seller while Ford Focus ranks second, when the counting is done by grouping different versions of the same vehicle together. On August 21, the Department of Transportation reported that the downsizing trend continued, with Toyota Corolla ranks as top seller after four weeks of programs, followed by Honda Civic, and Ford Focus, and Ford Explorer 4WD continues as top trading.
According to the USDoT, at the end of the Toyota program it contributed 19.4% of sales, followed by General Motors with 17.6%, Ford with 14.4%, Honda with 13.0%, and Nissan with 8.7%.
The following table shows the top replacements under the CARS program based on information submitted for rebates. Each vehicle model incorporates all the drivetrains, hybrids, and models of the year, which are tabulated separately in the US Department of Transportation rank.
Reception
Economic effects
In a study published after the program ended, Burton A. Abrams and George R. Parsons, professors at the University of Delaware, concluded that for every vehicle trade, the program has a net cost of about $ 2,000./li> A study of the Social Science Research Network opened in September 2010 concluded that the program only attracts future purchases: it produces a short-lived effect (360,000 additional cars sold in two months), but the effect is almost completely reversed in the next seven months because fewer cars were sold, and found no evidence of influence on employment, housing prices, or household standards in cities with higher exposure.John Irons, director of research and policy for the Institute of Economic Policy, said that in improving the economy, "in terms of bang for the buck, this is pretty high there there".the impetus in demand that the rebate has brought is the kind of stimulus that is urgently needed to escape from what John Maynard Keynes calls a "liquidity trap". According to his theory, consumers can become so worried about the economy that they rely on as much liquid wealth as possible, cut their spending sharply and thereby trigger the degeneration they fear. In addition, when the stimulus policy runs, cash-for-clunker looks very effective. Admittedly, it is not a very demanding measure, given that Keynes likes, if necessary, bury the money in a bottle so that people can dig and spend it. Cash-for-clunkers have many benefits beyond just getting more money through the hands of consumers and into aggregate demand.
Charities
Charitable organizations complain about the program, noting the lack of a car that can be improved for charitable purposes, and a source of income to fund the program. A collection of charities, under the auspices of Pete Palmer Vehicle Processing Center, reported a 7.5% drop in car donations in the month of the Car Rebate Credit System debuted.
Environmental effects
Critics argue that people who trade in cars will use the funds to buy trucks, with minimal profit on mileage. However, the average fuel economy of the clunker is 15.8 mpg, compared with 25.4 mpg for the replacing car - an increase of 61% (37% increase if using gallons per 1,000 miles). The new federal data analyzed by The Associated Press found that the most common swaps, with an incidence rate of more than 8,200 times, involved Ford pickup owners F-150. Fuel economy for new trucks ranges from 15 to 17 miles per gallon, which is equivalent to an increase of 1 to 3 mpg during clunker.
The Associated Press, in using Edmunds data, notes that many less-green cars have also been purchased under CARS, especially SUVs, Trucks, Luxury, and Crossover vehicles. Some buyers have been noted to have purchased Cadillac SRX, while other vehicles such as the Hummer H3T, Lexus RX 350, Lincoln MKX, and BMW X3 are eligible under the program, although rated below 20 mpg, some much smaller than the 25.3 average mpg for cars purchased under CARS. The models are also below the $ 45,000 threshold outlined in the CARS.
Declan McCullagh, of CBSNews.com, argues that "as fuel efficiency has increased since the early 1980s, automobiles are increasingly driven, plus there are environmental costs for building new vehicles in the first place." William Chameides, dean of Nicholas Environmental School at Duke University, believes that between 3 and 12 tons of carbon dioxide is emitted for each new car, due to factors such as the delivery of cars and electricity consumed in its manufacture. In addition, to offset the carbon footprint of a new car from the clunker (using a 18 mpg ratio for "clunker" and a minimum of 22 mpg for qualified vehicles), the average driver needs to drive about five and a half years; with trucks, the numbers soared to eight or nine years of typical driving.
Harvard economics professor Edward Glaeser argues that subsidizing fuel-efficient vehicles encourages more driving, because marginal cost per mile is driven less, which causes total fuel consumption to decline less than expected. He proposed that a more effective policy would be to raise taxes on carbon dioxide emissions. Bruce Belzowski, a scientist at the University of Michigan Transportation Research Institute, noted that the number of vehicles involved in the CARS program (~ 250 thousand) is a fraction of the number of vehicles currently on the US road (~ 260 million) and thus is not expected to has a significant effect on pollution savings.
A study by researchers at the University of Michigan evaluated the effect of the program on an average fuel economy considering the baseline in the absence of a program, as there is already a tendency to buy vehicles with higher fuel economy due to high gasoline prices. 2007 and 2008, and the 2008 economic crisis. The study found that the program improved the average fuel economy of all vehicles purchased by 0.6 mpg in July 2009 and by 0.7 mpg in August 2009, as summarized in the table following:
Reasons to remove most inefficient vehicles
Saving one gallon of gasoline per 100 miles saves 20 pounds of carbon dioxide, which is roughly a tonne of carbon dioxide every 10,000 miles of driving. An increase from 14 mpg to 25 mpg saves 3 gallons of gas per 100 miles, or 3 tons of carbon dioxide within 10,000 miles of driving. Older vehicle replacement also reduces other non-greenhouse pollutants. Consumption of "gas consumption" translating "miles per gallon" to "gallons per mile" size can help car buyers see gas savings from their trade.
Security
National Highway Traffic Safety Administration spokesman Eric Bolton said the new cars purchased under the program are also "much safer than the old clunkers they replace".
Memo score
Part of the Rebate Car Revenue Payment System makes the buyer eligible for the value of a car memo along with rebates, with dealers taking $ 50 of value and for sharing the remaining value to the buyer. While some dealers and the Car Dealers Association argue that buyers are not entitled to the value of the car memo, the advocacy group and the State Attorney General argue that the law makes the matter clear that the buyer is entitled to the value of the car memo. Some dealers claim that they do provide car scrap value to buyers.
Exotic cars crashed under program
Jalopnik reviewed the list published by NHTSA and found many cars destroyed under a program that has book value far beyond the rebates offered by the government. Among the few cars whose book value is worth more than a government price cut includes models ranging from GMC Typhoon to Bentley Continental R. However, the review further notes that many cars that were considered destroyed under the program were recorded incorrectly and/or swapped for the model or other car trim. Some exotic/collectible vehicles were canceled under the program including Maserati Biturbo with 18,140 miles, Syclone GMC, removed from scrappage in the program by a group of GMC Typhoon car enthusiasts, An Isuzu Vehicross, La Forza SUV, TVR 280i, and Ford Mustang models, Ford Taurus SHO, Chevrolet Camaro, and Chevrolet Corvette, among other cars.
End the program
On August 20, 2009, Transport Secretary Ray LaHood announced that the program would end at 8:00 pm. Eastern Time on Monday, August 24th. After the announcement, some dealers decided to stop participating in the program after Saturday, August 22, due to difficulties in processing their reimbursement through the government website where documents had to be filed.
Secretary Ray LaHood also commented that "it has become a sensation to be part of the best economic news in America", in a press conference on the announcement on 20 August. As of early August 25, DoT reported 665,000 dealer deals equivalent to $ 2.77 billion rebates.
In October 2011, former economic adviser to the Obama administration, Austan Goolsbee stated that, "the government misjudged how quickly the country could recover from economic damage to the 2008 economic collapse" and now knows that the country "proved to be longer, heavier journeys than we think at the time, "he would not have created this short-term program to stimulate the economy, but" he supports the overall stimulus program, which he claims dismisses depression. "
See also
- The parable of broken window
- The scrappage program
- Transport and the environment
References
External links
- "Official CARS web page (archived)". Archived from the original on December 26, 2009 . Retrieved 3 Mar 2018
- Gayer, Ted; Parker, Emily (31 October 2013). "The Car Allowance Rebate System: Evaluation and Lesson for the Future (policy brief)" (PDF) . Brookings Institute. Archived from the original (PDF) on November 2nd, 2013 . Retrieved 3 Mar 2018 Ã,
Source of the article : Wikipedia
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