The federal Cash for Clunkers program is getting a lot of trucks
and sport-utility vehicles off the road, but it hasn’t made
best-sellers out of the Prius or other gas-efficient hybrids.
By Mark Glover, The Sacramento Bee
The federal Cash for Clunkers program is getting a lot of trucks and sport-utility vehicles off the road, but it hasn’t made best-sellers out of the Prius or other gas-efficient hybrids.
The purpose behind the program was twofold: boost anemic consumer spending while lowering gasoline consumption. There’s no doubt that Cash for Clunkers accomplished the former, though interest now appears to be tapering off. It’s less clear what the trade-in program has accomplished on the environmental front.
Much to the chagrin of public-interest groups, a fair number of U.S. consumers are turning right around and buying new light trucks with their credits from the Car Allowance Rebate System, or CARS.
The Toyota Prius and Honda Insight, two of the most popular and fuel-efficient hybrids, are noticeably absent from the top-10 list of new cars purchased to replace turned-in clunkers.
“It appears that despite some of these glowing (federal) reports we’ve seen on the environmental benefits of the program, a lot of light trucks and SUVs are being purchased through the program,” said Lena Pons, a policy analyst Public Citizen, the Washington, D.C.-based advocacy group.
Public Citizen has filed a Freedom of Information Act request seeking more information on the CARS program, charging that the Obama administration has not provided details on clunkers being traded in and new cars being purchased.
Edmunds.com, the Santa Monica-based auto information site, has been doing its best to keep score.
According to Edmunds, the top 10 list of clunkers being turned in by U.S. consumers to date is an all-American-brand affair dominated by light trucks. The Ford Explorer SUV tops the list, with 10.2 percent of all clunker turn-ins nationwide.
Edmunds’ top 10 list of new vehicles purchased via the CARS program includes some gas-sippers such as the Ford Focus, Honda Civic and Toyota Corolla. But it also includes full-size trucks such as the Ford F-150 and Chevrolet Silverado.
The Ford F-150, which gets less than 20 miles per gallon in combined city/highway driving, was second on the clunkers-turned-in list, at 8.6 percent.
The Silverado likewise gets less than 20 mpg in city/highway driving.
Most using the CARS program are turning over a 1984 or younger vehicle getting less than 18 miles per gallon in combined city/highway driving. If the fuel economy improvement on the new car is 4 to 9 mpg, the federal credit is $3,500. If the improvement is at least 10 mpg, the credit is the maximum $4,500.
The rules vary for SUV, minivan or non-full-size pickup truck buyers. If the fuel economy improvement is 2 to 4 mpg, the credit is $3,500. If the improvement is at least 5 mpg, the credit is $4,500. If buying a full-size pickup or large van, the standard for a $3,500 credit is a 1 mpg improvement; it’s 2 mpg to get a $4,500 credit.
Jessica Caldwell, a senior analyst at Edmunds, said she was not surprised that some consumers were turning in old big vehicles to get new big vehicles.
“In the rules for the Cash for Clunkers program, it’s not necessary to have a change in lifestyle or fuel mileage,” she said. “If you still want a truck, you can get one. The program was set up to accommodate that sort of thing.”
Caldwell noted the two-fold intent of the program. “It’s not only a green bill to save the environment; it was also essentially going to boost (auto) sales,” she said. “I think that’s something we also forget.”
Caldwell said Edmunds’ dealer contacts indicate that many buyers taking advantage of the CARS program have been more interested in affording a new car as opposed to the potential environmental benefits of buying a more fuel-efficient vehicle.
“The rules clearly state that’s OK as long as you meet the mpg guidelines. This is a time when people are taking an advantage of a government program that’s attractive to a lot of people.”
However, the initial rush of buyers taking advantage of the CARS program slowed dramatically last week, according to Edmunds.
“Interest in the program is fading as fast as the first billion was used up,” said Michelle Krebs, another Edmunds’ senior analyst, referring to the gold-rush popularity of Cash for Clunkers program when it was introduced on July 27, prompting the government to add $2 billion in funding on top of the initial $1 billion.
The slowdown is being welcomed by some local dealers, who saw their previously unsold new-car fleets decimated by a rush of Cash for Clunkers buyers from July 27 to Aug. 3.
Now, government entities are awaiting sales tax numbers that are expected to spike upward as a result of that first buying rush. They’ll know in a few weeks how much help is on the way for their beleaguered budgets.
“From what I’ve seen just looking and walking around, I’d certainly expect an uptick,” said Rob Leonard, Sacramento County’s economic development director.
The Edmunds list of top new cars purchased in Cash for Clunkers deals does not include the all-new 2010 Honda Insight sedan (41.5 mpg city/highway). The third-generation Toyota Prius hybrid sedan (49.5 mpg) is 17th on the list, at 2.2 percent.
“When you look at the hybrid market, it’s a comparatively small part of overall sales, about 3.6 percent last month,” Caldwell explained. “I think that’s the reason behind that, although 3.6 percent is up from around 2 percent (market share) previously.”
