Cash For Clunkers: Junk Legislation? Page 2

June 10, 2009

Pile of junk cars

Additionally, the Specialty Equipment Market Association notes the impact the legislation would have on companies that provide parts and service out of warranty vehicles. “Scrappage programs as proposed will also hurt thousands of independent repair shops, auto restorers, customizers and their customers across the country,” said SEMA Vice President of Government Affairs, Steve McDonald. “This industry provides thousands of American jobs and generates millions of dollars in local, state and federal tax revenue. It is time to help the entire auto industry with programs that focus the incentive on the purchase of new vehicles, not destroying valuable old cars and parts.”

Cash For Clunkers programs in Germany and Britian have been popular, and German legislators have actually had to more than double their program's budget. The German program is based soley on a vehicle's age and does not guarantee the vehicle is scrapped. In theory, one could trade in an old Golf diesel for a Porsche Caynne and get a check, while the old oil burner gets sold to somebody in the old Warsaw Pack. The net gain to the environment under this scenario is negative.

Real questions need to be asked;

  • Whether accelerating the turn over of the existing U.S. fleet is actually good for the environment (taking into account the environmental cost of scrapping an old vehicle and manufacturing a new replacement, like the sweetheart of the eco movement, the 2010 Toyota Prius)
  • Whether it makes sense for the U.S. budgets to go further into debt to artifically stimulate new car sales
  • Whether the economic benefit of any bump in new car sales is worth the trade off hit that will be taken by those who do business and/or drive used cars

This is all good food for thought.  Yours are welcomed below...

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