Cash for Clunkers!

[Dave@Moon]

No investment is worse than a new car. How can my $4,500 used truck depreciate faster than the $45,000 new truck (I'm not interested in percentages)? The new one will depreciate a minimum of the cost of the used one during its first year alone. I can buy a whole lot of gas with the money I don't waste on the depreciating asset.

Doesn't it take a lot of valuable resources to build a new truck? Mr. A is thinking Green by "recycling" the older truck.

I believe that the next decade starts January 1, 2011. And Mr. A believes the same thing I do.

West, my point is that changing conditions will change this thought process. If you need a tow vehicle, you need it. The depreciation isn't really a factor.

Those old vehicles being turned in in this program are already depreciating at a rate that is unprecidented. The 4.0L Ranger I saw at the Pick & Pull yesterday is better than my 4 cylinder Ranger that I was buying parts for, but there just aren't enough people willing to eat that much gas to make it valuable enough to keep it out of this program already. This isn't going to be changed after the program is over.

Yes, 2 weeks ago there was a much beter field of $4500 tow vehicles to choose from, and yes buying a used vehicle (to the extent it's well maintained and modern enough to be comparable in performance and economy to new trucks) is a "Green" thing to do. But is it a good long term idea? How long willl that $4500 tow vehicle last? And when it's gone, what will still be around to replace it with? And how much will these future tow vehicles cost if they're as rare to the market as is anticipated?

I don't have any answers to those. My best guess would be if someone needs a good tow vehicle for the next 10 years or more, and anticipates having the means to still use it regardless of fuels costs, the future need of the tow vehicle may outweigh the desire to avoid depreciation.

==========

Also while decades are technically considered to be xx01-xx10, nobody really measures them that way. People celebrated the new millenium on 1/1/2000, and practically nothing out of the ordinary happened on 1/1/2001. And while I had some success telling people my 1960 Buick was a 1950s car, nobody want's to hear that my 1970 Triumph is a 1960s car, but i think that had more to do with the styling than anything else.

[R W Burgess]

Although the truck above is too old (1980)for the clunker bill, it still has a use for my family, even if it was a 1985 model.

The Chevy is on its second transmission, second motor, and needs a lot of attention each time I drive it. Used only about 8-10 times a year, it takes a quart of engine oil, and a pint of transmission fluid before it'll even move out the barn-lot, where it's stored. Sometime a battery change is required, or a jump, just let it run all day. :eek: I always leave the key in it. It's carjack proof!

The point is that even though this vehicle probably adds to the green house gases, if there is such a thing, it's the only vehicle that my whole family uses to haul mulch, old tires, trash, or even pull the occasional car trailer with a lawn mower. It's indispensable!

It's also, as Charlton Heston used to say....."When you pry my dead hands away from the wheel!":eek:

Wayne

[MCHinson]

You're wasting you time Dave. Even math doesn't make sense to these guys. They will believe the world is about to end, whatever proof you give to the contrary. As it ever was.

Barry,

Math makes sense to me. A condescending attitude, however, does not make much sense to me.

I attempted to buy a Hybrid tow vehicle to tow my car hauler trailer. It did not make economic sense to me, and that was when gas was $4.00 per gallon. When it hits Dave's $12.00 per gallon we will see. I suspect that by that time, there will be a next generation vehicle that will be much more efficient than the Hybrid Tahoe that I considered. Perhaps something electric, hopefully with electricity generated by nuclear power rather than a coal fired electric plant.

By the way Barry, what do you use to pull your wonderful custom built car hauler trailer? I hope you are practicing what you preach.

[Dave@Moon]

Wayne, My Ranger is used very much the same way you use your truck. It gets about 1500 miles per year. I keep it mostly because I like it. I bought it new long ago, it's dead-reliable, and it's economical to operate at the same time. (I was looking for a cheap pair of wheels at the Pick & Pay to mount snow tires on yesterday, among other things for my son's car.)

However the truth is I could probably rent a $25 pickup from U-Haul to do all the things i do with this truck, and it would cost me less than the plates and insurance do. It may be that eventually I'll have to give it up.

Times are changing.

[West Peterson]

Those old vehicles being turned in in this program are already depreciating at a rate that is unprecidented.

That's exactly my point. I think your point is that the next generation tow vehicles will probably hold their value much better, but that is because the government has eliminated the market in which I... I mean, Mr. A... wants to play. You say the clunker vehicles are not "nice," but I have to disagree. There are a LOT of nice "clunkers" out there from the late 1990s-early 2000s that could have been had for $3,000 or less. How long will they last? I'm sure 5-10 years depending on how well one continues to care for it and/or how much it is driven. Usually tow vehicles don't get driven much.

I bought for $1,000 a "worn out" 1996 Saturn SL1 that had 175,000 miles on it. That was almost six years ago and it's still going strong as it approaches the 300,000 mile mark. The clutch, transmission and engine have NEVER been opened.

And yes, depreciation "IS" a factor. A BIG factor.

[R W Burgess]

................... the future need of the tow vehicle may outweigh the desire to avoid depreciation.

QUOTE]

How does appreciation become a factor? I gave my brother $500.00 for that clapped out pickup. I put a $300.00 used transmission in it. It's probably still worth $1000-1500 to some family that doesn't want to scratch their new F150 (Hey, look at these new steps, so you don't have to climb into your new truck!:confused: ).

No, old vehicles can appreciate, not depreciate. I don't think the Burgess family will ever buy another new car, since new cars are now going for over twice what our first home cost us. :eek: :confused: :mad:

Wayne

[West Peterson]

We covered that already.

This might be something else for West's Mr. A to consider. 167 gallons of gasoline isn't exactly small potatoes these days.

Okay. I'll consider it. The math:

167 gallons times $2.50 = $417 in savings PER YEAR. Not a big savings considering that the new vehicle will cost me $417 PER MONTH more than buying a good used vehicle.

167 gallons times $4 = $668 PER YEAR. Still not worth it to me.

167 gallons times $8 = $1,336. (yawn)

[R W Burgess]

The Math????

Wait, don't forget the much higher insurance premium, the much higher property tax on new vehicles.

Heck, here in Virginia, most of my family cars require little more that $25-40.00 per YEAR property taxes (Thank you, Governor Gilmore! )

Wayne

[Barry Wolk]

By the way Barry, what do you use to pull your wonderful custom built car hauler trailer? I hope you are practicing what you preach.

Actually, my trailer hasn't been out for almost three years as it's 10,200# empty and is wasteful to tow, so I drive my cars to shows, rather than trailer them.

If I do need a tow vehicle my business owns F-450s that I can use. What's your point? None of them are gross polluters and none of them get poorer mileage than what's offered now. All of them are worth more than the $3,500 I would get, so the program doesn't apply. In fact, the program doesn't apply to vehicles with a 16,000# GVW, anyway.

My point is simply that 99% of the cars made since '84 are junk and the other 1% that are worth saving, will be. People need to get over it. There will be plenty of junkers for y'all. The contention that this program hurts poor people is about the lamest argument yet.

Funny, I didn't hear a peep out of anyone about crushing cars before C4C. Seems a tad hypocritical to me.

[Guest jennakortan]

I was thinking about this program as well. What car parts do they actually salvage from the clunker?

Edited August 13, 2009 by Rawja
Removed spam link (see edit history)

[R W Burgess]

I was thinking about this program as well. What car parts do they actually salvage from the clunker?

As I understand it, Jenna, it's everything but the motor, (Whoops, engine for those electric guys!)

Wayne

[Barry Wolk]

If you guys want to gripe about something that affects poor people, try talking about license plate fees for old cars.

In Michigan, at least, you could be driving a 20-year old luxury car and your plates would be nearly 10% of the value of the car. Start there before griping about this program.

[West Peterson]

The contention that this program hurts poor people is about the lamest argument yet.

I think Dave has already established that it hurts "poor people" since future "junkers" will have a much higher resale value.

Anyway, I wasn't arguing about/for "poor people", I was arguing for me, a money-conscious penny-pinching citizen who doesn't have any wish to buy a new car.

[West Peterson]

If you guys want to gripe about something that affects poor people, try talking about license plate fees for old cars.

In Michigan, at least, you could be driving a 20-year old luxury car and your plates would be nearly 10% of the value of the car. Start there before griping about this program.

Small potatoes since he's saving a bundle on insurance and monthly car payments.

[Barry Wolk]

So, you think $300 a year for a 20+ year old car is fair, and small potatoes. eh?

[West Peterson]

Did I stutter?

That is a lot to license an old car, I have to agree. Perhaps it's Michigan's way of keeping the real "clunkers" off the road. How much does it cost to license a new luxury car?

[Barry Wolk]

We have a value-added system, rather that the old weight system that we used to have.

When I got my '88 750iL the tags were near $600. They dropped to $500 after 3 years and eventually dropped to $300 after 10 years, and that's where they stand. Since I only use the car in the summer I just get temporary 3-month tags for it for $35. You can only do that once a year here. However, a "poor" person that buys one used will still be stuck with $300 a year until it's junked.

[MCHinson]

Barry, I never mentioned anything about "poor people". I have simply stated that I oppose government payments for these cars and trucks to be junked. I don't think it makes good economic sense. I also disagreed with your derogatory comments about any of us who disagree with Dave's math on the subject.

Your quote of, "If I do need a tow vehicle my business owns F-450s that I can use." seems to indicate that your personal behavior is more in line with my thoughts. An appropriate existing tow vehicle should be used instead of trading in every large vehicle for a hybrid. If you were doing what you appeared to be advocating, you should trade all of those F-450's for hybrid vehicles. Everybody who owns a non-hybrid vehicle is not evil. Nobody needs to treat them as evil for disagreeing on this subject.

Like Rodney King said... Why can't we all just get along?

[West Peterson]

It's not often I see a "poor" person driving a 12-cylinder BMW, even a 20-year-old one, and I doubt it's based entirely on the license plate costs. When a "poor" person buys an old car, it also has to be either easily repairable, or inexpensive to repair.

[Barry Wolk]

It's not often I see a "poor" person driving a 12-cylinder BMW, even a 20-year-old one, and I doubt it's based entirely on the license plate costs. When a "poor" person buys an old car, it also has to be either easily repairable, or inexpensive to repair.

Pu-leeze West, a 20 year old Caddy, Lincoln or full size anything is anything but easy, or inexpensive to repair.

Just cost me $400 to get the a/c compressor on my '77 TC rebuilt. That's inexpensive?

BTW, West, I see old 7-series running around here all the time.

[Barry Wolk]

Barry, I never mentioned anything about "poor people". I have simply stated that I oppose government payments for these cars and trucks to be junked. I don't think it makes good economic sense. I also disagreed with your derogatory comments about any of us who disagree with Dave's math on the subject.

Your quote of, "If I do need a tow vehicle my business owns F-450s that I can use." seems to indicate that your personal behavior is more in line with my thoughts. An appropriate existing tow vehicle should be used instead of trading in every large vehicle for a hybrid. If you were doing what you appeared to be advocating, you should trade all of those F-450's for hybrid vehicles. Everybody who owns a non-hybrid vehicle is not evil. Nobody needs to treat them as evil for disagreeing on this subject.

Like Rodney King said... Why can't we all just get along?

I wasn't responding to your statement about poor people.

I would disagree about the effect of this program. Coming from a devastated automotive area, I believe we should do what we can to get people back to work around here. The government numbers are BS. We're at 30% unemployment, or more. I fear that without this stimulus, my business, and others, would have been down the tubes.

I'm hardly a tree hugger, but I'm smart enough to understand that removing old Exploders from the road and replacing them with more fuel efficient and less polluting vehicles is a good thing.

The danger here was in doing nothing.

[R W Burgess]

Pu-leeze West, a 20 year old Caddy, Lincoln or full size anything is anything but easy, or inexpensive to repair.

Clunker Chevy's!

From a Nationally recognized parts company!

"This brand new crate engine comes with a GM warranty and is covered for 3 years or 100,000 miles in applicable GM vehicles only.

This universal 350ci engine uses a brand new block and can be used as a replacement for most GM vehicles from 1970-85. It produces 260 HP and 350 ft/lbs of torque with a 4 barrel carb. <O:p</O:p

Package Includes:<O:p</O:p

Edelbrock Performer Intake Manifold <O:p</O:p

Edelbrock Performer 600 cfm Carburetor<O:p</O:p

<O:p</O:p

$2217.99"

Transmissions are similarly priced!

As long as you can keep the fenders on these old cars, they will run darn near forever and at a price MUCH cheaper than a car payment!

Wayne

[West Peterson]

Pu-leeze West, a 20 year old Caddy, Lincoln or full size anything is anything but easy, or inexpensive to repair.

Just cost me $400 to get the a/c compressor on my '77 TC rebuilt. That's inexpensive?

BTW, West, I see old 7-series running around here all the time.

Barry

I try to relate my buying decisions on what it would cost to buy a new car. The yearly repairs I make on my "clunkers" maybe (maybe) equal the amount of ONE MONTH of a new-car payment. If the air goes out one year, that's $400; the next year something else. Rarely do I make more than one major repair during the year, and by doing most of the work myself and shopping for good part deals, it quadruples the savings. So, yes, $400 is inexpensive.

Are the old 7-series cars you see running around owned by "poor" people? How many 7-series cars are you seeing with the numbers 50 at the end?

[Barry Wolk]

Few, as there were few to begin with. I see lots with 35 in the numbers, though. Very plebeian.

[Barry Wolk]

We have a different buying philosophy, that's all West. I buy my cars new, maintain them, and keep them forever. I find that that's actually cheaper than buying someone else's poorly maintained POS and constantly chasing my tail in repairs.

My newest DD is 11 years old. It has 155,000 miles on it. Have put very little into it, so I think I'm way ahead, and, I have something reliable and that still has a decent resale value.

Edit: AND, they've never left me stranded, as clunkers often do.

[West Peterson]

My "poor" son was looking at a mid 1980s 524TD recently. It is in nice shape, too, as well as economical. I think he would have been a bit more excited about it, but they weren't available with manual gearboxes.

[West Peterson]

We have a different buying philosophy, that's all West. I buy my cars new, maintain them, and keep them forever. I find that that's actually cheaper than buying someone else's poorly maintained POS and constantly chasing my tail in repairs.

My newest DD is 11 years old. It has 155,000 miles on it. Have put very little into it, so I think I'm way ahead, and, I have something reliable and that still has a decent resale value.

Edit: AND, they've never left me stranded, as clunkers often do.

Well... you gotta have some smarts when buying (I'm not implying that you don't have smarts). No one wants to buy someone elses troubles. I constantly keep my eyes and ears open for possible replacement cars, which usually results in my not having to buy a car in an "emergency" situation, and giving me a lot more bargaining power. If the price is too high, I walk. I usually buy from people I respect and know that they have cared for the car. I don't actually buy "clunkers" in the literal sense of the word.

[MCHinson]

You're wasting you time Dave. Even math doesn't make sense to these guys. They will believe the world is about to end, whatever proof you give to the contrary. As it ever was.

I would disagree about the effect of this program. Coming from a devastated automotive area, I believe we should do what we can to get people back to work around here. The government numbers are BS. We're at 30% unemployment, or more. I fear that without this stimulus, my business, and others, would have been down the tubes.

The danger here was in doing nothing.

Those two of your thought are very different thoughts on the subject.

I would feel much better if we had the honesty to call it an economic stimulus program, allow a sizable government subsidy to buy any car built in America, and allow the free market to dictate if cars are crushed or cars are traded in and passed on to used car dealers to be resold. I don't like government policy saying one thing while the actual intent is something else. I dislike the way this program works, but I don't really want to argue with those who think it is wonderful. I also don't want to be accused of stupidity because I think this is bad public policy. I believe that you can be a fiscal conservative, a patriotic citizen, an environmentalist, and a decent human being all at the same time.

[Barry Wolk]

On that we can agree.

[Dave@Moon]

I think your point is that the next generation tow vehicles will probably hold their value much better, but that is because the government has eliminated the market in which I... I mean, Mr. A... wants to play.

No, not at all. I think that the market is absolutely flooded with appropriate tow vehicles, of which this program (at a maximum of probably less than 600,000 vehicles, assuming all are trucks) will barely dent. The vast majority of them were never more than soccer-mom cars, so "nice ones" will be around for decades.

Why? Mostly because the people who really need them, like Mr. A, are an incredible minority in the marketplace. They've been depreciating at a rate that's horrific for 2 years, and that's not likely to change much even with this program.

The next generation, which are more efficient but still nowhere near as practical as cars or mini-vans for the soccer-mom market, will initially be much more expensive due to C.A.F.E. considerations. However the double whammy of ever increasing fuel prices (reducing demand), and (now) being made mainly for a very limited market likely to never use them for basic transportation again (making them last longer, reducing demand further), is going to absolutely kill resale value for them. New or old, you're going to take a beating buying a gas hog in 2009.

And "the government" hasn't eliminated the market for these trucks. Circumstances has. It's merely being recognized by our better leaders (who wrote and passed the 30 mpg track C.A.F.E. requirement in 2007, BTW.)

Let's put this in perspective. This entire program eliminates less than 5% of one model year's overall truck production. If the C.A.R.S. program was limited to crushing only 1999 Ford F150 pickup trucks, the whole thing nationwide focussed on one model year's single truck model (and not including the F250/F350/etc.), it would only eliminate about 70% of them! This is literally a drop in the bucket, albeit an important drop.

The sky isn't falling. It's not even drizzling out there yet.

[Dave@Moon]

I believe that you can be a fiscal conservative, a patriotic citizen, an environmentalist, and a decent human being all at the same time.

Always remember: "Conservative" and "Conservation" are essentially the same word!

[MCHinson]

Always remember: "Conservative" and "Conservation" are essentially the same word!

I Absolutely agree that they are from the same root word. Somehow, people seem to try to twist the "Conservative" label into something bad, while "Green" is seen as a positive label. I still do not understand why a lot of "Green" fans, don't understand and appreciate what "Conservative" actually means.

[West Peterson]

No, not at all. I think that the market is absolutely flooded with appropriate tow vehicles, of which this program (at a maximum of probably less than 600,000 vehicles, assuming all are trucks) will barely dent. The vast majority of them were never more than soccer-mom cars, so "nice ones" will be around for decades.

All I can say is that I hope you're right. But my... er, Mr. A's suburban is already gone.

[Dave@Moon]

I still do not understand why a lot of "Green" fans, don't understand and appreciate what "Conservative" actually means.

A little bit of history will help with that. A great number of conservation groups were predominantly Republican in the 1970s, for instance the National Wildlife federation's membership is known to have been at least 70% GOP in 1980. Gerald Ford in fact was probably the "Greenest" President we ever had. There's little doubt that many conservationist voters helped vote in R. Reagan in 1980.

That was the turning point.

His roughshod running of the country's environmental and resource protection agencies was a shock. No one believed it could get that bad. For instance about 1/3 of the professional staff at the EPA was simply let go in 1982. (It made it kind of tough on new M.S. graduates of 1983, like me.) While George Bush Sr. thankfully reversed this trend, his son absolutely sealed the Reagan approach to conservation, to the often intentional detriment of "greener" member of his own party.

It's not the "Green" fans that are confused, it's the "Conservative" fans. That term came to mean, basically, "easy money" to many people. This was especially true of corporations like Haliburton, Exxon, Enron, Consol, and most other mining and energy companies, some of which still fund anti-science groups trying to debunk everything from global warming to wolf species endangerment.

To be sure, conservatively taking care of finance and the environment can be (and often is) at cross-purposes with each other. There was a time when this wasn't a problem for either party. One, the "conservative" one, has clearly lost it's way on this issue, and the push-back you're describing here is pointed at those elements.

Hopefully those easy lables will fade away someday. But then again, the lable "death panels" seems to be an ominous indcator to the contrary of late.

[joe_padavano]

Pu-leeze West, a 20 year old Caddy, Lincoln or full size anything is anything but easy, or inexpensive to repair.

Just cost me $400 to get the a/c compressor on my '77 TC rebuilt. That's inexpensive?

BTW, West, I see old 7-series running around here all the time.

I sure don't know where you're buying parts...

I posted about my 84 Custom Cruiser in the other thread. New brake rotors cost less than having the old ones turned. Ignition coil is $15 (and there's only one, vs individual coil-on-plug for most new cars). Air filter is $4 at Wal-Mart. Shocks are $25 each for top-end Monroe gas shocks, and I don't need to disassemble the entire suspension to replace them. Parts to rebuild the starter cost about $40 (bendix drive, brushes, and solenoid) vs. $150 to replace the non-rebuildable starter in my 99 truck.

And by the way, a rebuilt A/C compressor for your car is $147 at Rock Auto.

[Guest Skyking]

Get ready to eat your words, Bob.

Sales change July 2008 to July 2009 (data includes the first $1 billion in CARS stimulus money):

Nissan: -25%

GM: -19%

American Honda: -17%

Toyota USA: -11%

Chrysler: -9%

Ford: +2%

By the Numbers - July 2009: Turn of the Tide Edition — Autoblog

American Honda, Toyota USA? Where's most of the money going???? This is an outrage!!

[Guest Skyking]

So, you think $300 a year for a 20+ year old car is fair, and small potatoes. eh?

I'd say, move out of Michigan.

[Dave@Moon]

American Honda, Toyota USA? Where's most of the money going???? This is an outrage!!

It stays right here. Outrage away.

What do you mean "when"? They all are "built in multiple plants"/countries now. The highest domestic parts content of any U.S. assembled car is 90% (Ford Taurus), and only 11 cars have a content over 80% (including 4 Toyotas and a Honda). In terms of overall domestic content (including assembly costs) the most "American made" car in existence for 2009 is.....

....are you ready for this?.....

...the Toyota Camry!

That's right. In 2009 if you want to keep your money inside this country the most responsible car you can purchase to that effect is a Toyota. Not even the (now) second place F150 is as "American" as a Camry.

( The Cars.com American-Made Index - Cars.com )

And that's the unimportant reason why the government didn't restrict this program to "American" cars (if you can call the fact that there aren't any true "American" cars any more unimportant). The fact of the matter is using this program to aid only domestic manufacturers would run 100% against the stated purpose of the legislation, which is to raise the average fuel economy of vehicles on American roads.

I would agree that the stated purpose and the primary intended effect are not likely the same, and that car sales are what people are really looking for here. However until what's left of the "Big 3" catch up to the other manufacturers in quality, fuel-efficient cars, it would be an obvious contradiction in terms and a political nightmare to try and restrict programs like this to "Big 3" products.....even if there was a meaningful difference (or a specified difference) in domestic content for eligible cars.

[Guest Skyking]

Dave, you don't have to drill it, I read your earlier post. I'll buy a Toyota when we own the company..................

[Dave@Moon]

Dave, you don't have to drill it, I read your earlier post. I'll buy a Toyota when we own the company..................

Well, it closed down 11 cents at $85.05/share today (TM: TOYOTA MOTOR CORP Stock Quote ). I'm not sure, but I don't think my wife's and my current portfolio holds any Toyota stock. It well may, most of it is in mutual funds. But I can guarantee you that she'd be a little upset if you and I combined financial resources!

Your welcome to buy as much Toyota stock yourself as you'd like, however. We'll just have to leave it at that.

==============

(BTW, You did notice that all but Ford reported negative sales growth during the first stage of the C.A.R.S. program, didn't you?)

Edited August 13, 2009 by Dave@Moon
typo, added last line (see edit history)