By on June 29, 2009

Ford is jumping on the recently-signed Car Allowance Rebate System (a.k.a. Cash for Clunkers) to lure customers into the showroom. Ford’s home page includes a highlighted link to the “Recycle Your Ride” program. A prospective Ford buyer can enter details about their current vehicle into a drop-down menu system and quickly see if it qualifies for scrappage. They can also discover which Ford models earn the $4500 or $3500 federal voucher against the crusher candidate. So far the Dodge, Chevrolet, Honda and Nissan websites have nothing. Toyota and Volkswagen both offer primitive informational pages, but nothing to match the sophistication of Ford’s effort. You would think the government-owned auto companies would be all over the government-run incentive program. But no. And get this: KBB’s man tells the New York Times that the consumers might be better off without the vouchers . . .

Because the old vehicle will be destroyed, the credit is given instead of the regular trade-in value — not in addition to it — though some dealers might compensate customers for the vehicle’s scrap value.

The rules mean that the owner of a 2003 Chevrolet Trailblazer, which qualifies because it gets about 16 miles per gallon, would get nearly $2,000 less under the program than by making a normal trade-in. Conversely, a 1992 Honda Civic, which is worth only a few hundred dollars, does not qualify because its gas mileage is too high.

“It has to be worth not very much and it also has to get very poor E.P.A. fuel economy,” said Jack R. Nerad, the executive editorial director and market analyst for Kelley Blue Book. “It’s a fairly narrow profile. You’re talking about people who are probably economically challenged to begin with and they have to be able to qualify for a new car purchase in the midst of a deep recession. Those are some difficult parameters.”

And away we go.

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25 Comments on “Ford Builds CARS...”


  • avatar
    Gary Numan

    Why should Gov’t Motors or Fiatsler worry about actually selling cars when the money rolls in anyway?

  • avatar

    I was discussing this with my mother yesterday. I realized that only one of our vehicles qualifies and we’re not getting rid of it.

    Our vehicles are a fairly new Ford Escape, a 1998 Ford F-150, a 1999 Mercury Mystique LS, and a 1979 Buick LeSabre that hasn’t been driven for years and is gathering rust.

    Under this plan, the Buick’s too old to qualify, the Escape’s too new, the Mystique is too fuel efficient (at 21 mpg) and the F-150 could be sold under the plan but it would be more cost-effective to just sell the thing.

    This whole mess is basically a ploy to send old trucks and SUVs to the crusher. There are a few cars that qualify (such as the Mercury Grand Marquis or Ford Crown Victoria) but almost all of the vehicles that seem to qualify for this are trucks and SUVs.

    Meanwhile, people who diligently drive their reliable and sensibly-used Honda Civics and Toyota Corollas for years are getting shafted by this deal.

    And the worst part: Chances are, most of the people that bought those SUVs and trucks are going to simply buy another SUV or truck for an extra 2-4 mpg. And I’ll bet the majority of those people are going to be the type of suburban cowboy who shouldn’t be driving a truck in the first place.

  • avatar
    tparkit

    “You’re talking about people who are probably economically challenged to begin with and they have to be able to qualify for a new car purchase in the midst of a deep recession.”

    Not to worry – Washington excels at helping people with poor credit buy big-ticket items they can’t afford. The method-du-jour is for the federal government to buy the credit paper from the issuers at face value. This transfers the entire risk to the taxpayers, while giving the issuers carte blanche to extend credit to anyone who walks in the door. If that doesn’t work well enough, Barney Frank will come up with something else as he leads the charge back to a Ninja economy.

  • avatar
    Gary Numan

    tparkit

    Most excellent comment with exception of tying the “Ninja” name to Frank or our politicians. Please don’t do harm to a most excellent motorcycle that has proven to be quite an effective performance product that actually produces results such as winning on the track since 1984 or class leading top speed or quarter mile times throughout the years.

    Ninja = demonstratable performance

    Barney Frank = notsomuch

  • avatar
    tparkit

    “Ninja” = “No Income, no job, no assets” — all excellent qualifications for being bailed out or otherwise loaned money by the American taxpayer.

    Full disclosure: I own a Kawasaki Ninja. (Or, should I say, it owns me.) Great bike.

  • avatar
    John Horner

    Indeed, the vehicles which actually qualify for this program and are old enough for the scrap deal to be worthwhile are relatively few and far between. Most are owned by people who can’t afford to get into a new vehicle even with the $3,500 to $4,500 kicker. It will be interesting to see how long it takes to get to the 250,000 units authorized so far.

    I see two classes of buyers this might lure:

    1) Families with a third car sitting in the driveway which either gets little use or is juniors starter car. They might trade the clunker for something new, use that newer car for the parents, then demote what used to be the second oldest vehicle into junior’s hands. Alternatively, they could have the extra car crushed, trade-in one of their non-qualifying vehicles for market value and then use the combined value of those two against a new vehicle. Suddenly that old vehicle which was gathering dust in the driveway becomes a coupon.

    2) People driving a 10 year old Explorer, etc. who have a good job and a decent credit rating, but don’t have the cash to make a substantial down payment. They are spending lots of money commuting to work, and are ready for a more efficient ride. Ditching the old Explorer for a new Focus might make a lot of sense. With $4,500 on the Focus, the new car payments can probably be offset by lower running costs (including fuel, maintenance and repairs) for a new and more fuel efficient car.

    Dealers might also get some extra business from this though as it puts people into the “gee, maybe I should be getting a new car” frame of mind.

  • avatar
    jpcavanaugh

    “It’s a fairly narrow profile. You’re talking about people who are probably economically challenged to begin with . . . ”

    Exactly what I have been saying. Those with cars that qualify are not new car buyers. And most new car buyers won’t have a vehicle that qualifies for the program. The government had this bipolar focus on juicing car sales AND juicing the mpgs of the in-service fleet. In trying to do both, this program is not going to do anything significant for either.

  • avatar
    BritCrit

    You might be surprised, the owners with vehicles of 8yrs+ tend to have FICO scores 20 points higher than your average buyer. It is a narrow profile but they may not be as economically challenged as you believe.

  • avatar
    xyzzy

    I just tried the Ford site, it’s definitely clearer and easier to understand than anything else out there. Kudos to them for being on the ball with this.

  • avatar
    Quentin

    I was wondering if my parents’ clunkers would qualify, so I did a little research.

    1993 Subaru Impreza, market value = $0 (horrid condition, but mom still drove it because of the gas mileage), gas mileage = too high, does not qualify. Moot as the timing belt went last month and dad scrapped it out anyway.
    1995 Chevy S-10 (4cyl, RWD), market value = $1500, gas mileage = too high, does not qualify.

    Lets look at the daily drivers.
    2003 F250, market value = $8000 (low mileage, good condition) does not qualify, gas mileage = 14 combined.
    2002 Explorer, market value = $3000 (high miles), gas mileage = 16 combined. Qualifies.

    So, out of their 4 vehicles, and 2 of them being legitimate clunkers, IMO, only 1 qualifies and it is the “nicer” of what my mother drives. She’s excited about buying a Prius or Matrix next year, but if she goes FWD, she’ll want to keep the AWD explorer to drive when the heavy snow falls. (My two brothers drive Subarus and I had Subarus when I lived at home if that tells you anything about how many drive wheels are required where my parents live.) If she scrapped the Explorer, she’d have to get an AWD matrix and give up 5mpg on the highway. So, basically, CFC is totally useless to my family.

    BTW, my parents aren’t economically challenged. Cars are simply cars to them. When the cars die, they get replaced. They had their very beautiful ranch paid off by the time they were 45, all the while convincing my brothers and me that money was tight. haha

  • avatar
    SheriffBooth

    If the program had the potential to stimulate new car sales, the one year common ownership rule destroys it. Without a secondary market for the very limited universe of qualifying “clunkers”, the program has little chance of being more than a footnote.

  • avatar
    DrBiggly

    To xyzzy: I’ll second that. It is easy, clear, and tells you exactly what you could trade to and what your ride (if anything) would be worth for each type of vehicle they sell. I hope this alone nets them some sales, as nobody else has yet gotten their act together. Kudos to Ford. :)

  • avatar
    Bruce from DC

    I have one genuine clunker . . . but it doesn’t qualify because its EPA combined mileage is 20. It’s a 1991 Volvo 740. The interior is in very bad shape; the paint’s peeling on the horizontal surfaces and now it won’t pass the emissions test and the mechanic says it needs a new catalytic converter . . . at roughly the trade-in value of the car. Also due for a timing belt change and new brakes all around. 145K miles.

    I do think the lack of a secondary market is a big failing. Somebody without the funds to buy a new car but who owns a clunker could still realize the value by selling his car to someone and taking the cash to apply to a newer (or perhaps less thirsty) vehicle. Unfortunately, that won’t be able to happen.

    The point being that this legislation is really nothing more than a subsidy for car manufacturers.

  • avatar
    Slocum

    Damn — I had a $4500 clunker with a market value of a few hundred $$, but I gave it away last year. And the guy who has it now doesn’t have the money for a new car.

    I’ll tell you, though, who has both clunkers and cash for new cars? Answer — well-off parents of teenage drivers. And aren’t we glad to be handing them a $4500 subsidy (instead of, say, poor people who really need it)? In fact, poor people get screwed as some of the cars they could otherwise afford get traded in for scrap.

    Lastly, which auto company is going to be smart enough to make warranties fully transferrable for the next few months? That would make it possible for poor people with clunkers and rich people with money to make deals (poor person buys new car and sells to rich person).

  • avatar
    John Horner

    “Lastly, which auto company is going to be smart enough to make warranties fully transferrable for the next few months?”

    AFAIK, all new car warranties are already fully transferable.

    “It’s a 1991 Volvo 740.”

    Too bad it isn’t turbocharged. The turbo 740 just barely gets under the CARS 18 mpg wire.

  • avatar
    GS650G

    My F-150 is worth maybe 2200 dollars. I paid 4800 for it 6 years ago so this is almost a refund to me. Sorry if you don’t qualify but I’m looking forward to dumping this POS with fading paint, poor gas mileage, and a penchant for repairs every 30 days.

    It’s nice to be rewarded for doing the wrong thing, namely driving a gas hog truck.

  • avatar
    Slocum

    AFAIK, all new car warranties are already fully transferable.

    Huh — I guess I hadn’t noticed (never thought about either buying or selling a new enough used car for that to be an issue).

    So then the problem is sales tax for selling and then reselling. Here that would amount to $1200. Not the end of the world, but it’d be nice to figure out a hack to avoid the double sales taxes.

    I wonder if any dealers will be enterprising to advertise for people owning rebate-eligible worthless clunkers to match with new-car shoppers and put together those deals?

  • avatar
    jpcavanaugh

    The Ford web site confirms it. 1993 Crown Victoria with 105K miles, not elligible because its gas mileage is too good. 1996 Honda Odyssey with 211K miles – ditto. Both rated at 19 mpg. Both are second and third cars in the family, and either could, with appropriate incentives, be traded for something either newer or more efficient. But neither will be because without a subsidy, they are simple, cheap and reliable transportation.

    I guess I will just continue to swill fuel and foul the air while not supporting the domestic auto industry. In other words, I will save my money.

  • avatar
    conswirloo

    It might make sense for my wife and I. We’ve got a 96 conversion van used for her business, that isn’t an ideal vehicle(not as much cargo space as a cargo van, lightweight transmission and suspension, bad mileage, tranny probably on the beginning slope to grenading). Trading it in for a Transit connect(22kish) is MUCH cheaper than replacing it with a “real” van(30ish), while it should meet her needs.

    Now I just have to talk her into it, we’ll probably have the money at the end of the summer, but not sure if thats where she wants to spend it.

    Worst case, the van dies, we don’t replace it, repurpose my Tacoma for her work(camper top), and I get to drive the highlander when shes out of town.

  • avatar
    jimpen

    My wife and I both drive incredibly clunky cars: a 1990 Mazda B2600i truck and a 1992 Infiniti G20. Both have 200K+ on the clock, crappy paint and many of the problems associated with advanced car years: various body/interior dings, worn out emissions parts, gimpy power window motors and little electrical problems here and there.

    But our commutes are short, insurance is cheap and repairs, while annoying, are not that frequent. The idea of having a car payment with an increase in our annual registration and insurance just wasn’t that appealing.

    We were contemplating becoming a one-car/nice-car family when we first heard about C4C. We thought ‘Bingo! Finally, here’s our bailout.’ It would be perfect: $7K for our two beaters, some nice cash on the hood, $2K of our own money and we’d have a nice, new car with a steep, but doable, 36-month loan while taking two old, gas-hoggy-no-airbag-or-ESC cars off the road. This was a win-win-win situation: win for the family, win for some car manufacturer/dealer and win for the environment. Where do I sign up?

    Imagine my surprise when I found out our cars, while crappy, just weren’t crappy enough.

    It really burns me that we are doing the right thing for our family and the environment – using our cars for a long time, keeping them tuned and getting maximum bang for our buck. You’d think this is the kind of behavior Uncle Sugar would want to encourage. But then I guess that’s not what C4C is really for is it?

  • avatar
    John Horner

    @conswirloo, your ’96 Conversion Van to ’10 Transit Connect swap sounds like a smart idea to me.

  • avatar
    NulloModo

    Ditto on the good idea for the transit connect, we are getting lots of interest at the dealership over those vehicles.

    We have already had a few people come in interested in C4C. Realistically anything with over 100K miles, and definately anything with over 200K miles, isn’t going to get you more than the $3500 or $4500 as a trade in (unless it is something rare, or very late model that just racked up an insane number of miles in a short period). Yes, some of the cars that qualify could probably be sold to a private party for more than the C4C rebate, butmost people don’t want to deal with the hassle of selling a vehicle themselves.

  • avatar
    gusplus

    My ’99 540i qualifies. It seems shameful to send it to the scrap heap in favor of a Focus.

  • avatar
    armadamaster

    Interesting, I have not come up with a gas guzzling combination yet (trade-in) that provides a GMQ as an option for replacement at the sum based on their calculator, and even a Superduty and E-series come up. How’s that for fuzzy math? Ford loves their Panthers!

  • avatar
    v65magnafan1

    Thanks, Ford, but why would I bother?

    2000 Crown Vic with 130,000 Mi. This is a hot car for a rebate. It looks fine inside and out–except for some paint gone from the wheel well lips (aggressive Nokia snow tires spew high-velocity gravel and salt). White paint is white paint, so a cheap spray can will fix that problem.

    Everything works as new and it’s paid for. Unlike some of the vehicles described above, Crown Vics seem to be built as high-mileage vehicles. At this rate, I’ll be long gone before the CV meets its maker.

    Yeah, it’s a V8. So? If the dollar tanks and crude goes to $200-$500 a barrel or more, we’re all totally screwed.

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