Should the U.S. institute a vehicle scrapping plan?
Last month, Germany reported a shocking 21 percent improvement in auto sales, and the greatest driver in the uptick was a used vehicle scrapping plan that pays drivers 2,500 euros ($3,150) to remove their old car from the road. With new car sales in most other countries down by at least that much, it was widely speculated that other governments would look closely at Germany's new system to see if it would be worth adopting in their areas.
An opinion piece at Automotive News (sub. req'd) suggests that it's time for the United States to implement its own vehicle scrapping program. President Obama's recently-passed economic stimulus plan does contain provisions that are intended to help spur new vehicle sales, but has nothing as dramatic as what's been enacted in Germany.
Such a plan would certainly spark major debate as to the environmental benefits and drawbacks of replacing older cars with new ones. One one hand, new cars feature engines that generally use less fuel and definitely emit less pollutants. On the other hand, the production of cars in general creates its own emissions and uses lots of power. What do you think: With signs pointing towards a possible sales recovery in the U.S., is now the right time to give the market an extra kick with a scrapping plan?
[Source: Automotive News - sub. req'd | Photo: nico.cavallotto]
Reader Comments (Page 1 of 2)
Steve 3:30PM (3/09/2009)
If the new vehicles purchased were actually more fuel efficient than the ones they replaced, then this might be a great idea. But if all that happens is that a bunch of folks driving old trucks replace them with new larger more "efficient" trucks that actually burn thru just as much (if not more) gas because they are larger and have bigger engines, the net results isnt of any benefit to the environment.
Im sure I saw some figures that indicate that the energy costs of a new vehicle are about equivalent to 1-2 years of its use, so over a 8-12 year life, a new more efficient vehicle should easily offset the increased use of energy it took to manufacture it.
Should we be doing something like this to help prop up the auto industry? Given that the government is already pouring billions into the auto makers, would a program like this really do much more than the billions already being poured in?
Something else to consider is that this would require that a large number of those folks buying these new cars end up taking on more debt to replace those old vehicles that they had paid for long ago. Is that really a good thing at this time?
Reply
paulwesterberg 5:09PM (3/09/2009)
If you trade in your old sedan for a prius you will probably double your gas mileage, but if you trade in your old sedan for a hummer then you will probably halve the mileage.
I don't think you should be merely rewarded for ditching and older car without making an improvement. The other problem is that beyond the prius, insight, fusion hybrids and high mpg tdis most new cars dont offer any mileage improvement at all over those made 20 years ago.
I think an incentive program would be more useful once we have more plugin electrics on the market: volt, aptera, bzero, miniE, tesla etc. Those will offer 2-5x the efficiency of current vehicles.
Noz 2:53AM (3/10/2009)
Granted, newer cars SHOULD most definitely get better fuel economy than the older ones and the fact that after 100 years of automotive history, we barely break 20 MPG on average for most cars is freaking pathetic.
With that said, the advantage of newer cars is the areas of emissions with other types of pollutants. NOx, etc...are drastically reduced. But still, current cars have pathetic mileage.
Case in point....a 2009 FX35 gets a pathetic 15MPG or less on the road. A BMW X6 gets an even worse 13MPG. How anyone in their pathetic puny mind can justify buying and driving a car in today's world must truly be a out of control narcissist.
Scott K. 3:36PM (3/09/2009)
I have two answers to this:
My first answer, as somebody who is driving a 15 year old truck (small Toyota that gets 27 mpg) that we have outgrown (2 kids), think this is a great idea as that is a lot more than I'll get as a trade-in.
My second answer, from every other perspective I have, is that this is not the right answer to our economic or our environmental problems.
From an auto sales perspective, it would bump things up for a while. Until the program ended and the sales fall back down to normal. I mean, all the credit programs (and other creative car sales programs we've seen) have been doing is artificially elevating the level of vehicle sales to an unsustainable level. While I hope the big 3 survive (well, technically, I only care about 2 of the 3), this isn't the way to do it. This is the time to force them to right size their operations.
Reply
ronEbear 3:50PM (3/09/2009)
Yes.
Because older cars` emission controls suck assholes, to put it lightly. Sure, some new cars might suck more gas, but their emissions are probably a fraction of what they used to be.
Reply
Richard 4:01PM (3/09/2009)
What would be the incentive then? If the new car costs more to run than an older car, why would somebody do that? If you're assuming the environmental angle, don't, otherwise they wouldn't be driving an older car in the first place.
Richard 3:58PM (3/09/2009)
I'd like to know how much cars sell for in Germany. European cars are smaller and cost less as an average. Therefore, the $2500 incentive is larger in comparison than you'd get in the States. Also, cars have not gotten better gas mileage in the last 20 years, remember? That's why we are in this predicament. Cars have gotten bigger, and larger engines accompany them.
What's to happen to all those traded in cars? Other countries? Scrapped? For spare parts? Wouldn't a conversion program work too? Put a smaller engine in the car? Convert it to Electric? Just a few ideas.
Reply
LCS 10:16PM (3/09/2009)
A new basic Prius costs 25 550€(32 267$ US).
To get the 2500€ the old car(at least 9 years old) has to be scrapped (not sold or anything like that) and you have to get a NEW car that fulfills the Euro 4 emission standard(hard to find a new car that does not). But since gasoline is very expensive(over 6 $US/Gallon) in Germany most new cars bought will not be gas guzzlers anyway.
Throwback 3:58PM (3/09/2009)
NO, in case you have not noticed the USA is broke. If some folks would like to funds this project feel free to send your checks to the NHSTA.
Reply
SteveCT 5:19PM (3/09/2009)
Wrong. US treasury bonds are the single safest investment in the world, and people are buying them up as fast as they're made available. The economic downturn has more and more people worldwide buying up US government debt, meaning that the US government can effectively borrow as much money as it wants without having to increase interest rates at all. So no, our nation is not broke, and anything we can do to improve the economy is a good idea right now.
charlie 6:14PM (3/09/2009)
@SteveCT
thats an outrageously ignorant analysis. Obviously there are consequences to borrowing money. Its all money that we'll have to pay interest on and pay back. It probably decreases the value of the dollar. We can't do "everything that might improve the economy" as you say. Money is a scarce resource and we have to pick and choose the most efficient programs.
A vehicle scrapping plan is a retarded means of increasing efficiency. It doesn't inherently do anything at all to boost mileage. Higher fuel taxes would be the most economically efficient way to do it. Vehnicle scrapping is just a direct subsidy to the auto companies. Yeah, of course they do it in Germany. What used to separate America and Germany is that we wouldn't do that.
SteveCT 8:12PM (3/09/2009)
Gee, there are "consequences to borrowing money"? Wow, I'd never have guessed that! After all, it's not like everything that can possibly be done has consequences. You should also be aware that I said "anything we can do," not "everything we can do." There's a difference.
As for the merits of the vehicle scrapping plan, I agree that it's pretty much a direct subsidy to the automakers, and I agree that such a plan ought to take the mileage of both the old and new vehicles into account. That said, we're already directly subsidizing the automakers, and this plan would be a big help to the ailing auto industry.
As for borrowing money, it does indeed cause inflation, but notice that you don't hear about any devastating inflationary events during the Depression. Why? Because the economy was contracting, which caused deflation. Any inflation that results from government spending during a deep recession is offset by the deflationary pressure from the contracting economy.
As for paying it back, we won't be able to pay anything back if our economy collapses and we have a Lost Decade, like Japan. If the economy recovers, we'll be able to pay back any amount of debt we can take on. Sure, there will be tax increases, but that's a small price to pay for economic and societal stability.
oollyoumn 4:40PM (3/09/2009)
Just a thought, maybe to qualify the new car should be a PZEV. They only catch, car companies would have to make there PZEV models available is all states, which they should anyhow.
Reply
chauvinist pig 4:42PM (3/09/2009)
Let's do some math!
Instead of giving GM an additional 21.6 Billion, let's use it on a vehicle scrapping program and assume we'll give out a whopping $5,000 per car.
$21,600,000,000 / $5,000 = 4,320,000 cars we could scrap.
Now, let's say 1/4 of those go and buy a brand new car. That's 1,080,000 new cars purchased. According to the Federal Trade Commission (http://www.ftc.gov), the average price of a new car is $28,400. So the scrapping program has now generated $30.6 Billion in new car sales revenue.
Of course, it's not apples to apples (GM's not getting all $30B), and some figures (i.e. 25% new car sales, $5k per car) are guessed, but it seems to me like it would do more for the industry and economy as a whole if we went this route instead of handing it out to GM. Plus, this is not including used car sales, revenue generated from recycling old cars, jobs created to manage the endeavor, etc.
Additionally, the money would flow through the dealers as well, which would help them, and not solely the manufacturers.
Reply
paulwesterberg 5:11PM (3/09/2009)
You create such a program and new car prices will go up by 5k overnight.
captainpease 6:17PM (3/09/2009)
In-wheel electric motor technology. Instead of scrapping the whole car, remove the engine/transmission block and replace with batteries. Swap wheels/tires with new electric assembly. Keep old car but invest in new tech components.
Reply
Chris M 2:20AM (3/10/2009)
The problem with EV retrofitting is that not all vehicles are good candidates for such a retrofit, some are too heavy, or not sturdy enough for the battery weight, or the body has horrible aerodynamics.
Even if the chassis is suitable, the EV drivetrain and batteries must be custom fit, the design and layout of different car models vary too much. Even wheelmotors would require custom mounting brackets. That's why most EV conversions are one-of-a-kind efforts, with a lot of labor and planning involved.
Bottom line: suitable for hobbyists and tinkerers, but not for mass markets.
GenWaylaid 1:12AM (3/10/2009)
I don't know about emissions, but as an economic stimulus a car scrapping plan could put money where it's needed most. Drive down any country lane and you're bound to find a house with at least four or five extra old cars out front. Offer $3000 apiece and suddenly rural families can support themselves for months just by cleaning out the yard.
I say we make the rebate tax deductible and with no strings attached. Why not also extend the scrapping program to other common rural pollutants, such as broken lawn furniture and velvet paintings of Elvis?
Reply
Thanh T. 9:30AM (3/10/2009)
I think that a U.S. steel recycling initiative is a good idea.
The old steel can be recycled infinitely!
Using “clean coal technology” and other clean alternatives to the burn the furnaces at steelmaking facilities; the old steel can be melted and combined with other raw materials-alloys.
[It also helps to bring down the cost of steel and produces new steel products without compromising strength and durability.]
Perhaps, this steel recycling initiative might be able to help auto manufacturers and other businesses well into the future.
For example, debris from disaster areas can be recycled and help a particular region recover from storm damages.
I guess it’s up to the policies makers “to implement or not implement” an efficient recycling initiative. : )
Reply
Carney 1:08PM (3/10/2009)
Unless the new cars were fully flex fueled, able to run as easily on any alcohol fuel as on gasoline, buyers will remain fearful that they will be stuck not only with a new car note, but also sky high gas prices.
FFVs avoid this trap neatly by giving drivers an alternative fuel that would be much cheaper during a gas price run up. Making alcohol compatibility a standard feature like seat belts helps ensure that that alcohol fuel would actually be available since the there would be a big enough market for gas stations and new entrepreneurs to be able to dedicate fuel pumps to alcohol profitably.
Reply