Economics professors Burton Abrams and George Parsons sum up the Cash for Clunkers tragedy wonderfully in their essay Is CARS a Clunker? [PDF available here]. “Concentrated benefits create vocal advocates, while diffused costs produce silent, apathetic opponents,” they conclude after showing that the costs of crushing clunkers outweighed the benefits by about $2,000 per vehicle. But reality is even worse. As economists, Abrams and Parsons break everything into dollars and cents. That’s their job. But one look at the CARS.gov list [PDF] of vehicles “traded in” shows that, for car aficionados anyway, the true cost of Cash for Clunkers is almost impossible to boil down to mere money. Did you know some fool “traded in” an Aston DB7 Volante? An M3? A TVR? A grip of Ur-Quattros? Three Laforzas? I didn’t even know what a Laforza is. Now I don’t want to get all Hemmings on you, but this stuff is more than just heritage: these vehicles are wonderfully bad decisions waiting to happen. Literally thousands of young men are currently trolling their local Craigslist for out-of-reach vehicles at prices that would make anyone who knew better run away screaming. Thanks to Cash for Clunkers they’ll never understand the agony and the ecstasy of trying to keep an Aston running on elbow grease, generic parts and a Nietzschian will to awesome. And that’s the real tragedy.
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Wow…$2000 per car. That sounds like it is probably about the average value of a typically clunked-out car, and therefore the amount of value removed from the economy by clunking a car. Coincidence?
I’ve never heard of LaForza, either. Looks like a 92 Colt Vista- hard to imagine anyone paid a premium for one of those. Where were they sold?
It’s a tragedy some of those exotics were clunked though, money pit or not. Once they’re crushed in six months that’s just fewer parts for the remaining ones.
Which only proves the old adage, “Never underestimate a person’s capacity for stupidity.”
A TVR? For real (he says, sobbing)?
I just spent part of Sunday afternoon with the gentleman who’s bought out the American TVR parts supply company from an old friend of mine, and knowing that parts are once again easily(?) available, I’m starting to dream of an early-80’s 280i again.
Did anyone notice the GNX at the top of the list under ASC?!!!!
Really, someone C4C’d a GNX? A crappy one is worth 10k or more!
This is so so wrong I can’t even begin to contemplate how this could happen. I might cry.
Well, this is pretty enlightening.
It’s a foregone conclusion we have a stupid government, but now it’s pretty clear we have a stupid populace, too.
I’m trying to imagine the thought process of the guy with the Aston, but I can’t, anymore than I can imagine how my dog thinks.
Well, let’s see…
On one end of the scale, we have a junked Aston.
On the other side is a guy who gets to keep his job and feed his family tonight.
And we’re going to tell the working guy that it’s a shame that Aston got junked to help him keep his job?
Tell him that to his face…in front of his kids, preferably.
FreedMike:
No problem. Then he can go explain to the kids of the guy who DIDN’T get bailed out by the taxpayers, why he got to keep his job but their daddy didn’t.
Cuts both ways.
RetardedSparks :
September 23rd, 2009 at 12:08 pm
I’m trying to imagine the thought process of the guy with the Aston, but I can’t, anymore than I can imagine how my dog thinks.
Maybe the guy with the Aston had a massive repair bill and it made more sense to take the $4500 and run. It can happen with exotics. Who knows? It’s none of my business.
RetardedSparks :
September 23rd, 2009 at 12:28 pm
FreedMike:
No problem. Then he can go explain to the kids of the guy who DIDN’T get bailed out by the taxpayers, why he got to keep his job but their daddy didn’t.
Cuts both ways.
Speaking as one of the people who spent tax money on the bailout, but ended up losing a job anyway, I refuse to be bitter at the guy who did.
In the end, things like the bailout are about saving families, and that’s more important than saving some dumb car. Cars are things and can be replaced; families cannot.
I understand this piece is meant to incite outrage, but in reality, each of these ‘magnificent’ cars/SUV’s clunked-in for cash was probably a god-awful beater, needing major mechanical and cosmetic work to bring in anything like top market value.
And btw, a ‘LaForza’ is an orphan Italian luxury SUV made in the early 90’s, which had a reputation for self-destructing as fast, if not faster than a Range Rover…not a big loss, really.
If someone was truly stoopid enough to trade in a mint DB7 Volante for $4500 (doubtful), than the villagers SHOULD storm this idiots’ house with burning torches…lest this village idiot decides to breed, and his moron spawn becomes a threat to us all. But to hold our government responsible for any one individual’s extreme stupidity is unfair.
Nobody, NOBODY is stupid enough to trade in the black Volante pictured above for $4500. Relax, people….we lost some rusty, broken-down beaters with expensive nameplates, that’s all. Sad perhaps, but not a catastrophe.
If you’re so torn up about it, you can, today, go out and buy a beat up money-pit exotic car, and throw away several THOUSAND dollars of your own cash to make it shine…put your money where your mouth is.
How on earth could a DB7 be worth only $4500? The car must have been completely trashed.
I’d be interested to see what the above mentioned special interest cars were traded in on in the C4C program.
RetardedSparks :
September 23rd, 2009 at 12:08 pm
Well, this is pretty enlightening.
It’s a foregone conclusion we have a stupid government, but now it’s pretty clear we have a stupid populace, too.
I’m trying to imagine the thought process of the guy with the Aston, but I can’t, anymore than I can imagine how my dog thinks.
RetardedSparks, did you ever have a car that cost you so much in embarrassment, humiliation, money, lost dates, not being able to make it work? A car that made you want to go out and shoot it in the hood? (Cept the ricochet of the bullet would likely kill you and get you a Darwin Award.) Maybe that’s what went through the guys mind. “Wait I get $4500 bucks and the government takes the old nag out and shoots it?!?!?!?! Where the hell do I sign up?!?!?”
BTW I had one, it was an 82 Chevy Celebrity with the 2.5L Iron Duke. It was my first car.
I just looked up Aston Martin DB7 on autotrader. The prices ranged from $5,500 to $75,000 with an average of $49,000. The $5,500 one specifies that it’s a wreck. The next lowest after that is about $35,000. Even with a massive repair bill, there’s no way you can justify junking a DB7. Everybody arguing the “but it saves jobs” angle –in case you hadn’t noticed, auto restorers, repair shops, and specialty parts makers employ people too. They just don’t have a union that gave a lot of money to the party in power.
If these vehicles really are worth more than $4,500, isn’t it the responsibility of the owner to know this and thus sell the vehicle in a venue where he or she will receive more money?
It’s not as though anyone was mandated to participate in the Cash for Clunkers program.
Oh man. I totally know what a LaForza is. Last time I saw one was on the I-5 on the way to San Diego. Didn’t know they were worth any money though.
This thing reads like a victim list, though I have to admit to grinning when I saw how many Voyagers got C4C’d.
I have to agree with sfdennis1 here…
Remember that “cherry” maserati biturbo that got C4C’d and what everyone said about it? A friend of mine with an ‘88 RX7 Turbo nearly C4C’d it because he wouldn’t be able to sell it for it’s C4C price in it’s current state. The M3, Quattro and TVR guys probably all felt the same way. They’re probably unfinished perpetual project cars, or rusted.
You could also make the same point about C4C as you could states giving out film subsidies. That it’s a total waste of money, but can be justified as bringing in business for local economies, though temporary as it may be.
2008 Scion xD – huh?
And then there’s the couple who wanted their Xterra crushed, but found out the dealer treated it us a trade-in:
http://blogs.cars.com/kickingtires/2009/09/dealer-turns-clunker-into-trade-in-upsets-customers.html
Even if the DB7 did not have an engine or transmission, it should still be worth more than the $4500 for parts alone. Somehow, this one does not make any sense at all. I’m curious though, Where does the information come from that authenticates that a DB7 was actually traded in on this program?
phillyjim :
September 23rd, 2009 at 12:56 pm
Everybody arguing the “but it saves jobs” angle –in case you hadn’t noticed, auto restorers, repair shops, and specialty parts makers employ people too. They just don’t have a union that gave a lot of money to the party in power.
True, but what makes more difference to the economy – the failure of Joe’s Auto Repair or General Motors?
I don’t think there will be any shortage of cars to repair, given this economy.
FreedMike: “Maybe the guy with the Aston had a massive repair bill and it made more sense to take the $4500 and run. It can happen with exotics. Who knows? It’s none of my business.”
It was almost certainly not his best move. He could have sold the car, as-is-where-is for a reasonable sum, as noted, probably $5K or better. Then, he could have waited until September or October when dealer inventories were restocked and dealers were begging for customers and saved himself another $nK on the purchase price.
Even if he got the full C4C credit, he probably lost a significant chunk of it back on the purchase price. I admit, I didn’t check the Chevy dealers but the Honda and Toyota guys were insisting on MSRP and getting it.
C4C was “An Act to Ensure Full Margins for Auto Dealers” more than any kind of real stimulus.
So the true economic cost of CFC, as fully revealed so far, is $5,500 to $6,500 per car traded in, with the taxpayer footing such a lovely bill.
The manufacturers and dealers got a window of time where the government directly and heavily stimulated their profit margins and sales, using taxdollars, in the form of direct transfer payments.
Too bad for manufacturers and dealers that the normalized market is still working against them, even after the great dealership and auto production cull of ‘08-’09, but that’s where equilibrium comes into play: Eventually, true equilibrium, provided by the number of willing buyers, willing sellers, and the number of goods in true demand (and at a particular price), will determine all.
They’re machines. Machines that can be replaced. How they got to the C4C program really doesn’t matter, as long as it was on the up and up. Maybe it was jilted soon-to-be-ex-wives crushing the cars before the secretary got them. Whatever.
I get that we lament some of them being crushed after the fact. It’s easy to do so; everyone is ‘a good person’ after they pass, and there’s some amount of the same thing here. That said, if it was really, really a good idea for someone else to buy them, doesn’t capitalism sort of dictate that that would have happened?
Did anyone see the Top Gear where they bought exotics for GBP10,000? One of the cars they bought for 10k had already had a 20k engine rebuild. The car with the rebuild promptly threw a rod and disintergrated.
I could see that happening to a DB7.
FreedMike :
September 23rd, 2009 at 12:23 pm
On the other side is a guy who gets to keep his job and feed his family tonight.
And we’re going to tell the working guy that it’s a shame that Aston got junked to help him keep his job?
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Of course it’s a shame to rob a bunch of Walmart cashier $200 each to support a undeserved (as judged by car buyers) $80k/year UAW job.
Wow FREEDMIKE I can’t believe that you really think this was a good way to spend 3 billion dollars.
wsn :
September 23rd, 2009 at 1:39 pm
Of course it’s a shame to rob a bunch of Walmart cashier $200 each to support a undeserved (as judged by car buyers) $80k/year UAW job.
And who decides what that worker “deserves” – you? Me?
How much do you deserve to make?
And how would YOU feel if some stranger who had never done your job, and had no idea what it entails, questioned YOUR salary?
In fact, does anyone ask how much ANYONE who works for ANY company that lives off government largesse – and the list is massive – makes?
Holy Hell- someone traded in a 2006 A4 Cabriolet Quattro! It better have had some irreperable damage on a salvage title!
There’s also a 2008 Suburban, SIX 2008 avengers (LOL) and TEN 2008 Grand Marquis and TWO 2008 Foose F150s, plus a whole bunch of onesy twosy’s from 08. Talk about depreciation!
JTParts :
September 23rd, 2009 at 1:51 pm
Wow FREEDMIKE I can’t believe that you really think this was a good way to spend 3 billion dollars.
Well, if we can spend who knows how many billions a month to keep Iraqis from blowing each other up over centuries-old tribal blood feuds, I don’t see how we are stupid to toss a few billion into the economy to keep plants open and people working.
educatordan:
Yup. I drove a rusty mid 80’s 2WD Chevy pickup with 200k on the clock all through grad school. We called it the Blue Bomb, as opposed to the Blue Bomber, on account of the chalked and faded sky blue paint job and persistent gas leak.
I actually did better with the ladies driving that than anything since!
And yes, I would have happily traded it for $4500.
I just can’t imagine how bad and beat up an Aston would have to be. That’s all.
I never meant to start an argument over people, deserving or not, or the value of anyone’s job. This is a car site. Unfortunately, cars and politics have become closely linked in the last year, but it is still appropriate to discuss the program’s effect on cars, and the car enthusiast hobby.
——————————-
Finally, back on topic, this list MUST be an un-vetted list of applications received, because I cannot in any way imagine a Corolla of any vintage getting worse than the 18 mpg combined cut-off. Has anyone done a cross-check of this list against the eligible vehicle list?
On the PDF list of vehicles that were traded under the CARS program, under just about every make of car there is a model denoted as “UNLISTED”. So there are cars that the government payed for that they don’t know the model of. Kind of important when it comes to knowing their MPG’s and if they qualified to be clunked. I wonder how many Mercury Tracers, and Escorts, etc. got clunked and listed as “UNLISTED MODEL”. It also made a difference whether the person got $3,500 or $4,500 off the new car. It really has FRAUD written all over it. This whole waste of money is totally unbelieveable!
…or maybe the person who traded the Aston was a wife who caught her hubby cheating…and she traded it in on an Aveo.
Put a big red bow on it, and rolled it up in front of the McMansion. “Well, dear, I found out about that secretary you’ve been diddling, so I traded your Aston in. Happy anniversary!!!”
RetardedSparks :
September 23rd, 2009 at 1:58 pm
LOL +1
I’ve never really owned a “cool” car, lack of funds and practicality have always won out. But I agree with you on the action. The most vehicular action I’ve ever gotten were in a 1987 Olds Cutlass Supreme (a 4D Brougham of all things, but at least it had 307V8 4bl and posi)and a 2004 F150 Heritage with power nothing.
…or maybe the person who traded the Aston was a wife who caught her hubby cheating…and she traded it in on an Aveo.
Now that makes a lot more sense than any of your economic arguments. I’ve read some estimates that the true cost of C4C when all the overhead (both for the govt and dealers) is included was around $20,000 per car.
True, but what makes more difference to the economy – the failure of Joe’s Auto Repair or General Motors?
C4C was not exclusive to GM cars, it benefitted all manufacturers selling cars under the price cap.
There are a number of vehicles on that list that didn’t even qualify for C4C because their fuel economy was over 18mpg combined under EPA estimates, how did those slip through the cracks?
‘C4C saves jobs’? No it just takes money from some people so other people can buy more stuff. You get a new car, your kids inherit more govt. debt. Way to go.
Over lunch, I took a few minutes and ran down the list. Other cringe inducing moments:
1991 BMW M-3 (E30)
1991 BMW M-5
1992 BMW 850i
1997 Rolls-Royce (er, don’t you mean Bently) Continental R
If that list doesn’t raise a few eyebrows, it damn well should.
- 2002 model year Audis
- 2007 model year Chevy Pick-ups
- 2008 Chrysler 300
- 2 2006 Roush F150s
I have to kind of laugh when I see 3 ‘87 Excalibur Phaetons. I didn’t realize there were that many of those cheesewagons laying around.
Anyway, some of those trade-ins made think of some guy who had done something REALLy bad. He sits down to watch CSI and then goes ‘Oh f***. What to do? I know! Cash for clunkers. No evidence AND 4,500 bucks!!!’
BTW, note there isn’t a single Miata.
A couple of thoughts.
I thought that a req of C4C was the car had to be operable, to help prevent fraud. Wouldn’t that rule out totaled supercars?
Even if a wrecked DB7 could fetch more than $4500, you still have to find the buyer who wants it. That could take a long time, C4C is immediate.
Only the engine blocks of traded in vehicles had to be destroyed. Everything else could be stipped off and sold for salvage, so the remaining parts should still be around for restorations/repairs.
PS Notice that there wasn’t a single Miata!
the duke…yes, I noticed the GNX. How many were there in the first place?
Clutch –
According to the governments rules, yes, the vehicles had to be operational when they were traded in. However, the local Toyota and Nissan dealerships down here were paying to have wrecked cars towed or flat-bedded in for customers. There was no way for the government to check if the vehicle was actually running when it came in or not, save for a signature on some paperwork from the dealer.
Aha!
From the cars.gov website:
“Note that this information reflects information submitted, but not necessarily reviewed or approved as qualifying transactions.”
What this means is that LOTS of dealers took anything from anybody, and when their applications get booted there is going to be some ugliness over who comes up with the missing $4500….
There could also possible scenario that dealers took cars on regular trades, then decided themselves to C4C them for some reason (like when they found that Aston had a Chevy swap!)
The program was so horribly managed that nobody really had any idea how it worked anyway.
Someone clunkered a 2008 Scion xD, a 2008 Hyundai Elantra, and a 2008 Hyundai Accent?!
I thought the car had to be 2006 or older, and these vehicles wouldn’t seem to qualify from a gas mileage standpoint, and their trade-in values would be substantially more than $4500. Something smells funny.
FreedMike, I can’t believe you actually fell for this. If you believe three people’s jobs were saved because of this program, you are naive. September sales now will be ridiculously awful, because everybody that was considering a new car purchase the slightest bit, ad qualified for CARS, has bought their subsidized cars already. GM and Chrysler still posted a sales decrease last month, and just wait for the September numbers. I would be surprised at anything better than a 35% decrease from either Government Motors subsidiary. All CARS has done was encourage people to buy their new vehicle in August, but it did not address anything for the long term.
The thing that betrays the lack of thought on the part of the car buyers the most is that during the $4,500 give-away most of the dealers quit dealing, i.e. they sold cars for much closer to list than normal. As for me, I am waiting until some of these buyers start defaulting on the loans they couldn’t afford in the first place before I lay my money down.
I think the angry soon-to-be ex-wife scenario makes best sense (that muffled thud they are hearing at the dealer may be the body in the trunk rolling around).
NickR wrote: If that list doesn’t raise a few eyebrows, it damn well should.
Yeah, I just looked over it myself. It is rife with vehicles that clearly get better than the required maximum 18 mpg and/or are clearly worth much more than $4500 if in running condition (another requirement). I smell rampant fraud.
A sampling:
2006 Toyota Corolla
2008 Scion xD
2008 Altima coupe
2006 Lincoln Zephyr
2008 Ford Mustang
2002 BMW X5
2006 A4 Cariolet Quattro
I’m uncertain of something. It’s hard to believe that some people turned in cars of that sort for a quick $4,500 trade, but I can see it, especially if maintaining one proved to be costlier than the owner anticipated, etc, or they have enough money that the real worth of the car means very little and they decided on a quick swap to something that won’t incur wrath from strangers in parking lots.
But that a dealer would then take these cars, drain the oil, replace it with liquid glass and run the engine until it’s destroyed? That I find hard to believe. I realize that most car salespeople only focus on ways to make money and often know very little about cars, but I’d think there would be some hesitation before doing that, possibly by deciding that the value of the car is more than the $4,500 they expect to get from the government.
If I’m the salesman and some clown wants to clunker a DB7 Volante, well to clunk it it has to be a driveable car. I say “Hey I kinda like this ride, the Prez will only give you 4.5K, I’ll make it an even 5 grand and we’ll put free undercoating on your new one! Whaduhyahsaybuddy, is it a deal?”
That baby is on e-bay in an hour and I drive until she goes.
Bunter
Given the number of non-qualifying cars on the list, and that it is just a list of submitted cars, not approved ones, I think the most likely scenario is that a lot of the vehicles on that list were the result of misfiled paperwork. Incorrectly entered/read VINs resulting in different models showing up, car dealers submitting the information on the car that was purchased instead of the car that was clunked, dealers or the CARS.gov people testing out the submissions website with dummy cars, etc, all of that could lead to the random cars that shouldn’t show up on that list.
Gunit :
September 23rd, 2009 at 2:40 pm
‘C4C saves jobs’? No it just takes money from some people so other people can buy more stuff. You get a new car, your kids inherit more govt. debt. Way to go.
Without stimulus programs, we’d have a lot more unemployed people.
More unemployment = less tax reveune
More unemployment = more government handouts
________________________________________________
Less tax revenue + more government handouts = more government debt
The only question is: do you want to go into debt to support a shrinking or growing economy? If it’s the latter, then stimulus makes sense.
phillyjim :
September 23rd, 2009 at 2:16 pm
Now that makes a lot more sense than any of your economic arguments. I’ve read some estimates that the true cost of C4C when all the overhead (both for the govt and dealers) is included was around $20,000 per car.
And in the same vein, how much would the “overhead” have been for unemployment, job retraining, Medicaid, and eventually, welfare if we HADN’T done a stimulus package? I’m no economist, but it doesn’t take one to figure that the tabl would have been a LOT more than three billion dollars.