Cash for Clunkers Turns 15. Did It Do All It Was Supposed To? (No.)
I climbed behind the wheel of a used but loaded four-door Ford F-150 XLT pickup. It had a 5.4-liter V-8, an engine about which a mechanic friend once said, “If every vehicle came with that motor, I’d be out of business.” I checked the air and the heat; both worked. The stereo sounded good. The interior was clean.
I drove it from the back of a GM dealership to a bay in the service department. The automatic transmission shifted properly, the power steering worked, the brakes were fine. I pulled it into to the bay and handed the keys to a mechanic. He drained the oil and replaced the plug.
Then he prepared two quarts of a special oil replacement that was 40 percent sodium silicate and 60 percent water. He poured it in and started the engine. The mechanic gunned the accelerator a few times, then kept the truck idling at 2000 rpm. After about six minutes, the engine began to falter, and the mechanic applied more throttle to keep it at 2000 rpm. Soon the engine shook, rattled and died.
The truck then sat for an hour as the solution hardened. I was shaken more than I expected I’d be—this truck was nicer than the pickup I had at home that I used to tow my race car. To purposely kill it just seemed, well, cruel.
But that’s what the Car Allowance Rebate System, or CARS—known nationwide as “Cash for Clunkers”—did to 677,081 vehicles in the summer of 2009. Hard to believe it has been 15 years since the federal government funded the $3 billion program, and it has been essentially forgotten. But it was big news in 2009.
The economy was grim, with the auto industry hit especially hard after overproducing and underselling. (One Ford executive wryly confided that they were losing money on a bunch of sales, “But apparently we think we’ll make it up in volume.”) Chrysler filed for bankruptcy on April 30, 2009, with General Motors filing a month later. They got an $80 billion bailout from the federal government. Compared to that, the CARS allocation was pocket change.
But if CARS took more than 677,000 vehicles off the road, then it had to put 677,000 brand new ones back on it at a very dire moment for Detroit. New-vehicle sales were suddenly robust. Customers, trading in “gas guzzling” clunkers, got a credit on newer, more fuel-efficient vehicles. You had to buy a car with an EPA-rated fuel efficiency of at least 22 mpg, which got you a credit of $3500, or 28 mpg for a credit of $4500.
For the story I was working on, I went to multiple new car dealers to look over the collection of trades they’d taken with CARS. But there were awfully few legitimate gas guzzlers. Yes, the government said they had to average 18 miles per gallon or worse to qualify, but given the type of job the vehicle was built to handle, 18 mpg may not be so bad.
At the first lot, a Ford store, doomed CARS trade-ins included two Chrysler minivans with V-6 engines, and a very nice Ford Windstar minivan with a V-6, full leather interior, a six-disc CD player, and what appeared to be brand-new tires. Three Ford Explorers with V-6 engines, two Dodge Dakota pickups, two six-cylinder Jeep Cherokees. There was a clean Jeep Grand Cherokee Laredo with the 4.0-liter six-cylinder engine and a new set of Michelin tires, which alone probably cost at least $500.
And there was a white-over-red Ford Mustang LX convertible with a white leather interior. With a 5.0-liter V-8, it met the 18 mpg threshold exactly. Cash for Clunkers vehicles, by the way, had to be drivable—you couldn’t push your car with an already seized-up engine to the dealer and expect to participate.
I saw no land-yacht station wagons, no runout full-sized vans, no Chevrolet Suburbans, even. Relatively few of the Clunkers were, well, clunkers. The Obama administration, which backed the legislation, took it on the chin for that. Said the right-leaning Cato Institute: “Suppose each clunker was worth $3000 at a guess, that would mean that the government destroyed $2.25 billion of value.”
“Destroyed” is a bit of an overreach. Car recyclers had 180 days to part out the clunkers if they wanted, with the exception of the engine, which did have to be destroyed. (Break the rules, and there was a $15,000 fine.) Some proponents of the program complained about this—why let them sell parts if it just helps more clunkers stay on the road?—but a lot of the CARS trade-ins did indeed go straight to the crusher. A car’s engine is the most valuable piece of the vehicle to recyclers, and some passed on participating in CARS at all because of the limited amount of money they could make selling fenders off a Grand Caravan.
CARS began on July 1, 2009, and ended on August 24, after the $3 billion was exhausted. Congress originally appropriated $1 billion, figuring it would last until winter, but the money went so fast they had to ante up another $2 billion.
I followed that Ford F-150 to the salvage yard, where it was delivered the next day. Turns out they had plenty of F-150 parts and didn’t need any off this truck. It would go straight to the crusher in a few days, flattened and placed atop of a stack of crushed vehicles that looked like toy cars a child had stepped on.
Did I want to come back and watch? I did not.
Periodically, there has been talk over the years about bringing CARS back, but it appears to be one and done. In many respects, CARS played a successful role in preserving the American automotive industry; it did give the economy in general, and the auto industry in particular, a shot in the arm at a critical time. And, statistically, it did raise the average fuel mileage of the American fleet.
But did it take “clunkers” off the road? In a word, no.
Auto enthusiasts and political conspiracy theorists are also a toxic mix. I come here to avoid politics and wacko theories. If you hate the government, send me your Social Security check. And Hagerty- Stick to car stories without any Gov’t regulation angles unless absolutely required to report a story. Who the hell cares about “Cars for Clunkers”? I assume there are a lot more germane socio-economic issues that have contributed to a dearth of low-cost, semi-reliable vehicle availability. You may want to re-visit the effect COVID-19 had on, oh, just about everything over the past five years.
The reality of life is that someone that can afford to buy a new car, any new car, is in better financial condition then someone who is barely scraping by and counting pennies to keep their actual “clunker” running so they can get to work and earn just enough to put some gas in it. Wash, rinse, repeat.
IMHO, a better program would have been to mandate that the “clunker” be somehow evaluated as gross polluter, regardless of MPG, or in badly dilapidated, but yet still driving, condition. I would also make it so that the clunker could still be traded in for a newer better used car. This would have the effect of raising used car prices, which has the side effect of stimulating new car sales. I might even suggest that the buyer meet some kind of “hardship” test, e.g. that they would be unable to buy a car without the program.
I realize I’m dreaming but can you imagine the feeling for a young single mother working barely above minimum wage to be able to trade her rusted-out ’98 Cherokee for an 2019 Accord with payments that don’t take over 1/3 of her paycheck?
I’m from the government. I’m here to help you.
I saw a bunch of videos on YouTube of the seizing process. It seems one of the hardest was the Jaguar V12 engines. One of them took almost six hours. They had to put gas in a couple of times to keep it going until it finally quit. It would be interesting to have access to the database of cars that were destroyed, so we will know just how much rarer our cars are now. I have a few that managed to escape the wrath.
There was no help to the American car companies at all. The program had no stipulation on buying American, and most people ended up buying foreign.. It just hurried up the death of Pontiac, Olds, Mercury, Saturn, etc. and it gave huge bonuses to Toyota, Honda, Lexus, Mercedes, BMW, etc. The government hacks should have said “if you take the program, you had to buy an American car.” That would have saved the Detroit car Makers.
Trump would have done it that way!
I’m not ragging on those who prefer foreign brands but the Cash-For-Clunkers program was supposed to bolster the US auto industry. But it didn’t take long for Congress to approve foreign manufacturers to participate after they started whining they weren’t getting US taxpayers’ money. Just another case of our government spending our tax money supporting foreign manufacturers.
Yep. I recall reading that Kia and Hyundai benefitted the most from CARS.
This was a huge environmental disaster.Think of how much energy was wasted, how much plastic, vinyl and rubber ended up in landfills, and how much carbon was emitted in just the crush down and melt down procedure. What a waste!!
If I were to rank ill-conceived, disasterous government policy that achieved the exact opposite of its stated goals, this would be near the top.
A) Needlessly wiped billions of dollars worth of good conditioned, perfectly serviceable vehicles off the country’s balance sheet.
B) Was a disaster and punishment for the non-affluent. The the used car marketplace was deprived of a large supply of good condition used cars, thus raising prices of those remaining. (I know, I was shopping for a used car at the time and as astounded as to how prices had jumped for good quality used cars) Likewise, the market for used engines and parts was deprived of high value parts, making the repair of other older but still serviceable cars more expensive for the majority of Americans who couldn’t justify or afford a new vehicle. The billions of dollars more worth of vehicles that got pre-maturely crushed for lack of suitable parts to repair them isn’t included in the official number of what this cost Americans.
C) Was a gift exclusively for the wealthy. Most of the people who bought new cars through C4C were people who were going to buy a new vehicle anyway and could already afford to without a federal handout. It was essentially welfare for the wealthy as they got a big discount at the expense the rest of taxpayers and the economy who didn’t get a new car. (EV subsidies largely achieves the same)
I don’t know who has been talking about bringing this insane policy back, but they should be tarred-and-feathered.
I recall reading that CARS was a bonus of sales for Kia and Hyundai, but it did very little to help the domestic auto industry. Has there ever been a government rebate program that was a success?
Don’t lament the “nice” Ford Windstar. I had one, and one of the happiest days of my life is when I was hit head on in a grocery store driveway by a Ford F-250. It finally laid to rest that transmission eating piece of garbage.
Here is the list of cars… some of them are unbelievable. BMW X5s, Stealths, lotsa S10s and Rangers, and even a few exotics. Incredible waste of collectibles!
I remember it called the South Korea stimulus program as KIA and Hyundai seemed to benefit the most – not the US brands
All cars are clunkers. (except mine)
What they should’ve done as Institute testing of diesel engine soot. They should make every truck that has had the emissions messed with (Rolling coal) And crush those vehicles immediately. Then those knuckleheads wouldn’t be so quick to Disable their emissions.
As soon as they crush one of those trucks that owner would have to go out and buy a new one and that would stop this emission tampering
More governmental stupidity.