'Cash for Clunkers' Not Much Help for Sales or Environment?

The “Cash for Clunkers” bill passed by the U.S. House of Representatives will not do much to benefit the environment or to stimulate vehicle sales.

That’s the conclusion drawn by analysts at Edmunds.com, a leading site for information about all things automotive.

The House bill’s provisions would allow car owners to get a voucher worth $3,500 if they trade in a vehicle getting 18 miles per gallon or less on one that gets at last 22 miles per gallon. The voucher would grow to $4,500 if the mileage of the new car were 10 mpg higher than the old vehicle.

Owners of pickup trucks, minivans and sport-utility vehicles that get 18 mpg or less could receive a $3,500 voucher if a comparable new vehicle averaged at least 2 mpg more than the old one. A $4,500 voucher could be obtained if the mileage of the new truck, minivan or SUV were at least 5 mpg higher than the older one.

To qualify, the participant would have to own the vehicle for a year and the vehicle would have to be crushed. The $4 billion program would last for one year or until the funding ran out.

“If you can get more than $4,500 for your vehicle, you’re better off selling it or trading it in without taking advantage of Cash for Clunkers rebate,” noted Karl Brauer, Edmunds editor-in-chief.

Jeremy Anwyl, Edmunds CEO, noted that “in terms of vehicles sales, the only consumers who would be interested are those willing to take no more than $4,500 for their current car and yet be financially able to buy a new one – quite a narrow profile.”

Anwyl believes the one-year ownership requirement should be eliminated. “If the goal is to remove old cars from the road, why should it matter who owns hem and for how long?” he asked.

He also believes the scrappage requirement should be eliminated so that more people could benefit from the program. He contends that if owners of newer gas guzzlers could get above a fair value for their trade-ins, more people would participate.

As to the environmental benefits, John O’Dell, Edmunds green car adviser, commented that “The idea sounds like it has good green credentials, but it isn’t likely to move the needle very far.”

He said a counterproposal advanced by California Sen. Diane Feinstein and other senators would make more sense.

Under their proposal, a car owner’s trade-in would need to get 17 mpg or less to qualify and only new cars getting at least 24 mpg would qualify. Owners would get a $2,500 voucher for a new car that gets 7 mpg more their trade-in, a $3,500 voucher for cars that have a 10-mpg improvement and a $4,500 voucher for cars that get 13 mpg more.

The senators claim their plan would save 32 percent more oil, save drivers 176 gallons of gasoline a year and cut greenhouse gas emissions by 32 percent more than the House proposal. The senators program would expire in 2012.

Some vehicles that would qualify. Edmunds compiled this sample list.

+ Cash For Clunkers Car Buying Stimulus Bill

1996 Honda Passport ; 15 mpg, $1,227 trade-in price

1997 Lincoln Continental: 18 mpg, $1,179 trade-in price

1998 Chevrolet Silverado; 14 mpg, $3,378 trade-in price

1995 Audi A6; 18 mpg, $1,261 trade-in price

1996 Toyota Land Cruiser: 13 mpg, $4,042 trade-in price