Episode 217 – Clunker Sales Misleading, Chrysler Ends Partnership, New Hyundai Equus

August 28th, 2009 at 12:00pm

Runtime 7:52

Cash for clunker sales in the American market were completely misrepresented by the government. Chrysler pulled down the logos of Hyundai and Mitsubishi at its Global Alliance engine plant in Michigan. Toyota is ending production at the NUMMI plant in California. All that and more, plus we give you a look at the upcoming Hyundai Equus.

Transcript and Story Links after the jump . . .

Here are today’s top headlines. Clunker sales were completely misrepresented by the government. Chrysler dumps Hyundai and Mitsubishi in its engine deal. Toyota makes it official: no more NUMMI. And we give you a look at the upcoming Hyundai Equus.

Up next, we’ll be back with the news behind the headlines.

This is Autoline Daily for Friday, August 28, 2009. And now, the latest in the auto industry.

Car sales under the clunkers program in the American market are so erroneous they border on the fraudulent. The U.S. Department of Transportation reported that the top-10 vehicles bought under the program were almost all subcompact cars, led by the Toyota Corolla and Honda Civic. But analysts at Edmunds point out that the government counted sales according to the type of powertrain in a vehicle, something that has never been done in the history of reporting automotive sales. Take the Ford Escape. The front-wheel-drive versions were counted separate from the all-wheel-drive versions. When you count sales by nameplate, the way the industry has always done it, the list changes dramatically, and suddenly it’s not dominated by compact cars. Which begs the question, why? Why did the government count sales in a way that foreign automakers and compact cars were the big winners in the Clunkers program? You can get the full story by watching last night’s Autoline After Hours with sales analyst Jessica Caldwell at Edmunds on our website right now.

The Detroit Free Press reports that Chrysler has pulled down the logos of Hyundai and Mitsubishi at its Global Alliance engine plant in Michigan. That plant, which is operated by Chrysler, makes four-cylinder engines designed by Hyundai, with machinery from Mitsubishi. The idea was for all three of them to use engines from that plant. But Hyundai has never sourced engines from the plant. All the four-cylinder engines it uses at its assembly plant in Alabama are sourced from Korea. And Mitsubishi’s production has collapsed so much that it doesn’t need engines from the plant. Meanwhile, Fiat has its Multi-air engine that it would love to put in that engine plant so Chrysler doesn’t have to pay any royalties to Hyundai or Mitsubishi.

Two weeks ago we reported this was going to happen, and now it has. Toyota is ending production at the NUMMI plant in California. Toyota will stop building cars there next March and will shift production of the Corolla to Canada and Japan and Tacoma manufacturing will be moved to Texas. This is part of Toyota’s global effort to cut up to 1 million units of capacity.

Ford stopped selling the Crown Victoria to customers in 2007 and now The Detroit News reports the company will stop producing them for police departments in 2011. The company plans to offer a model of the Taurus. But police departments like the rear-wheel-drive, frame construction of the Crown Vic, and most police equipment is designed for it. 85 percent of all police cars sold in the U.S. are Crown Vics so it will be interesting to see if Ford can keep those sales or if police departments will look for other alternatives.

NAVTEQ, a major supplier of map data to automakers and portable GPS makers just released the results of a research study. In Germany, the company monitored three-types of drivers – ones with navigation systems, ones without navigation systems and ones with navigation systems that feature real-time traffic updates. The study revealed that traffic-enabled nav systems can dramatically save time – around 18 percent on an average trip compared to drivers without navigation. The company says that savings add up to four days per year! CO2 emissions are also 21 percent lower. Even if the savings are only half true, they’re still a pretty big deal.

We have a new world record to report, and it’s not half-baked. According to Autoblog, the head chef at the Royal Plaza On Scotts hotel in Singapore, along with a gang of helpers, built what they’re calling Asia’s largest racecar made of bread. That’s right, the life-sized F1 car is fashioned from 22 different kinds of bread. But the whole project begs the question. How much DOUGH it cost to make it? And is it CARB exempt? In any event, I’d bet the car’s creators are the TOAST of the town. I’ll stop now.

Can Hyundai really make a run at the luxury market. Coming up next, we’ll take a quick look at the Hyundai Equus.

Hyundai is out to prove to the world that it’s a serious car company, one that can take on the best in the world. Last year it came out with the Genesis sedan, which served notice to everyone just how serious it is. Next year it’s going to bring the Equus sedan to the American market, with an average price that will probably settle in north of $50,000. We just got a chance to test drive a Korean-spec version of the car and we’ll have a full review coming next week. But here’s a little taste of my instant impression of the interior of Hyundai’s upcoming luxury car.

Like I said, we’ll have a more complete review and driving impressions of the Equus coming next week.

But later today you can watch the latest episode of Autoline Detroit. My guest this week is John Hoffecker of Alix Partners, which specializes in turning companies around. He talks about how the auto industry has been hammered by globalization, but that the industry is only half-way through the globalization process. You can learn more of what’s in store by watching the entire show at AutolineDetroit.tv

And we’re almost ready to go, but before we do, we have to cover this week’s trivia quiz. We asked you to identify what this car is. And the correct answer is, it’s a Peugeot RCZ. As always, we randomly selected this week’s winner, and the winner is, Lance Witt from Edgerton, Wisconsin. Congratulations Lance, you just won this Honda Insight baseball hat.

Across town and around the world, that’ll do it for the top auto news this week. As always, thanks for watching, we’ll see you on Monday.

49 Comments to “Episode 217 – Clunker Sales Misleading, Chrysler Ends Partnership, New Hyundai Equus”

  1. Pedro Fernandez Says:

    I still don’t buy Edmund’s claim, except the one about the Escape 2wd 4wd mixup, around here I’ve seen lots of new Corollas and Elantras. Hyundai Equus? I don’t see many buyers spending big bucks like that on a brand that just a few years ago was building crappy cars and their cheapest model goes for less than $13k. John appears to be enjoying doing these shows more and more, good for him.

  2. G.A.Branigan Says:

    I believe the edmonds version.Why not?As your seeing new toyotas around your area,we’re seeing more new fords then ever.The Focus is extremly popular around here with new ones showing up all the time,and this is a small town too.Ford’s quality is really up there now.

  3. Pedro Fernandez Says:

    GA you love your Focus now, but will you love it 5 yrs from now? that’s the $66k question, initial quality has indeed improved in just about all cars, except most Chryslers. But long term reliability has yet to be proven. We just have to wait and see, I hope so cause I got my eyes on the Fiesta, but we have been let down by American brands so many times now, it’s hard to be optimistic.

  4. Pedro Fernandez Says:

    Do you think the govt. lied about the c4c figures? for what purpose? are they trying to get people to feel bad for the domestics. By reporting the truth, then people would have more confidence in buying America, don’t you think?

  5. Thor Says:

    BOTH Versions, Edmunds and Government, seem to be Correct, and BOTH disprove (!!) JOhn’s point!

    John is off his rocker to suggest any ‘fraud” (SIC!) in the Government reporting, just because they did not use the traditional reporting methods used by the industry! These people do not know and do not care, and there sure is NO fraud involved, and if there was any bias, it is in FAVOR of the domestics, that’s why Cash for clunkers FORBID anything above 18 MPG to be scrapped, AND ALLOWED POS with as low as 22 MPG to be bought.

    Even if you look at the Edmunds top 5 as given by John, THREE of the five are COMPACT CARS, so what are you, John, complaining about this claim, even YOUR data prove it CORRECT! that a huge number of cars BOUGHT under the program were COMPACT CARS, while most cars scrapped were NOT, they were not even cars, as few cars are below 18 MPG!

    And, finally, FORGET ALL OF THE ABOVE, the PROPER statistic to check is NOT the top 5 or top 10 but the TOTAL SALES, and there is NO disagreement there, the WINNERS were the IMPORTS (toyota, honda, hyundai and nissan) and the biggest loser was CHRYSLER, and the imports increased their market shares while ALL big 3 REDUCED theirs! I DARE you, John, to dispute THAT! And in a few days, the August sales will come out and will provide FURTHER PROOF of this.

  6. G.A.Branigan Says:

    Your right Pedro.One year and counting,LOL.The “percieved” quality,or lack there of is an ongoing problem with the american autos.All of the bad rep was of course earned.Now to undo some of that is gonna be tough.

  7. G.A.Branigan Says:

    @Henery Schaffer:You can stop spamming any time now.

  8. Thor Says:

    “GA you love your Focus now, but will you love it 5 yrs from now?”

    He should not love it even today, since FOrd DEFRAUDED the US consumer by NOT offering the REALLY NEW, and significantly improved, 2nd Gen Focus it sells in Europe, which has got excellent reviews there. But over here, maybe thinking tha tmost Focus buyers would not care, it continues offering the OLD focus, a 90s tech oldie, with only a FACELIFT in exterior styling and a few electronics and computer improvements, and I am not even sure that the facelift is better than the old styling!

    US consumers should be up in arms about this, but I bet most do not have a clue about the above.

  9. Thor Says:

    “The “percieved” quality”

    It is not just perCEIved, it is ACTUAL and HUGE gap in quality between a Chrysler Avenger or Dodge Caliber and any Honda or Toyota. The domestics even dare to use the infamous hard plastics that were criticized even in the 80s junk cars that had them! I rented an Avenger (ONCE, will not repeat!) and it is a ludicrous vvehicle, and the Sebring has been touted by Top Gear as the Worst Car in the World.

    No wonder Chrysler is bankrupt and sold down the river to Fiat for peanuts…

  10. Alex Kajdi Says:

    MCElroy,

    Too bad about Nummi. California is losing jobs left and right just like the rest of the country. Do you have any ideas who might be interested in the Nummi Plant? We spoke about this issue before and my suggestion that maybe Tesla and Saturn (Penske) might be interested fell short because either had the combined annual sales volumn to even use one half the plants production capacity.

    Your boardcasts on the automotive Industry are very enlightening. What is your solution to revitalize the automotive Industry? The Government’s “Cash for Clunkers” probably did a little when we compare that the US only spent 3 Billion on Clunkers, while Germany Spent 10 Billion on their Clunker Program. Maybe you can ask your viewers to make suggestions as to “What needs to be done to resurrect the American Industry?”

    Have a great weekend!

  11. Pedro Fernandez Says:

    Ford has admitted that the European Focus will have to be more expensive than the one being sold now, so it would price it near the Fusion and would push buyers to look elsewhere, the only way they could keep the cost lower is to avoid adding a lot of standard equipment to the base model but then that would put it at a disadvantage when you compare it to the competition.

  12. Nick Stevens Says:

    “# Henery Schaffer ”

    HenEry? Really? You can’t even spell your own name, spam diva? Get lost, Abdullah!

  13. Kit Gerhart Says:

    From my perspective, the big problem with the current U.S. Focus as a “basic” car is that they dropped all the body styles I would consider. If the next Focus sold here is available as a hatchback or wagon, I’ll be on Ford’s shopping list. If they continue with only sedans, I’ll look elsewhere.

    The European Focus is a very good car, but if sold here, it would be too expensive to compete with Civic, et. al.

  14. Pedro Fernandez Says:

    Another point for the Focus, Ford discontinued the 2 and 4 dr hatchbacks, which sold well and had little competition here. besides the previous Focus was a better handling compact that most of its competition and then Ford decided to make it softer-handling. That, I don’t get.

  15. Jim Sachetti Says:

    Alex wrote: “Too bad about Nummi. California is losing jobs left and right just like the rest of the country. Do you have any ideas who might be interested in the Nummi Plant?”

    Today there was an article in Autonews.com that Indian Mahindra is looking for a plant in the US to make their compact diesel trucks they are trying to sell in the US market next year. That way they will not have to pay a steep penalty they would if they imported them. But Nummi plant is probably way too large to do just that, since the volume is not expected to be more than a few thousand a year.

    There is significant overcapacity in the World auto industry, and that includes US plants. Unless the plant can be converted for non-auto use, it will be difficult to use it to make cars.

  16. Thor Says:

    back in 03, i rented a FOcus in Detroit for a day, and then a Camry in Denver the next day, both from Hertz. The difference was almost zero ($71 vs $77 a day), but the two cars could not be more different, with the Focus really unacceptable, Noisy, underpowered and rough, with a poor interior, while the Camry, even tho it was a low-level rental, was so smooth and silent, I thought I was going 70-80 and realized I was doing 95! No comparison. Earlier than that, maybe in 96, I rented a corolla 4 door, which went plenty fast, but had a very light steering, which felt very uncomfortable, like the car did not handle well, did not go straight like a train, etc.

  17. Pedro Fernandez Says:

    Thor: you’re comparing 2 different classes of cars, the Camry is considered by the EPA a full sized car, while the Focus is a compact. I was also horribly disappointed with a PT cruiser I rented 3 yrs ago, I asked myself: would I ever buy this car? HELL NO, ditto for an Accent the following year. Yet I rented a Civic last year and HELL YES I would have traded my Corolla in a heartbeat. Even The Cobalt I rented this year for 4 days, was better than I had expected.

  18. dave Says:

    I would not be suprised if the gov. numbers were “cooked” maybe so they can say see no one whats trucks or big vehcles so the car companies should stop making them….that whole GREEN / GLOBAL WARMING ….uh stuff

    I dont trust anything out of the gov. when it comes to reporting numbers, there is always some kind of angle

  19. Steve Says:

    We should all ask the question of who benefits from the clunker data. Does Edmunds receive more support from domestic mfg, dealers and consumers? Would the government really want to highlight the F-150 is in the top five? With the government fudging on GDP, CPI and budget projections, I am inclined to agree with John. Tallying this up by powertrain vs. nameplate was politically motivated. Likely to put more pressure on domestics to improve their small car powertrains. Why hasn’t this data been broken out not by nameplate, domestic/foreign but by the amount of domestic content instead if this is really about reviving the industry. I would also like to know how many of these vehicles were financed vs. cash pays.

  20. Thor Says:

    Thor: you’re comparing 2 different classes of cars, the Camry is considered by the EPA a full sized car, while the Focus is a compact

    Pedro, PLEASE, you think I did not know that? BTW, they are just different SIZES, NOT classes, the Focus is no less luxurious than the Camry,

    BUT, if you read my post again, carefully, the point was that HERTZ charged me almost the SAME price for each, $71 vs $77 a day, which made the FOcus UTTERLY unacceptable, given how primitive it was, and the Camry a HUGE bargain!

  21. Pedro Fernandez Says:

    So your beef should be with Hertz for charging too much for the Focus?

  22. Alex Kovnat Says:

    I was at the Woodward Dream Cruise two weeks ago, and it was nice to once again see 1957 Chevy Bel Aires and other classics from the 50′s and 60′s. But I also liked seeing cars displayed by the Motor City Marauders: the Lincoln-Mercury Division’s version of the soon to be discontinued (for police as well as civilians) Crown Victoria.

    I rather liked seeing 2003/2004 Marauders with Eaton superchargers. One has to admit, there are users who need full size RWD cars with V-8 engines. Ironically, SUV’s modified for police use would be even worse gas guzzlers than the sedans they replace, and an SUV’s higher center of gravity creates rollover danger when going around a curve too fast.

    So I would urge Ford to reconsider their decision to discontinue the Crown Vic even for police use.

  23. Thor Says:

    # Pedro Fernandez Says:
    August 28th, 2009 at 2:15 pm

    So your beef should be with Hertz for charging too much for the Focus?

    Noooo, my beef was with the FOCUS being so inferior than the Camry,for essentially the same price. And my other beef in general is with all the rentals I have tried, GMs, Chryslers, Nissans, Hyundais (Sonata too!) and Fords, were all unacceptably poorly made with very poor transmissions, interiors etc, and that is why, since Honda and BMW do not sell many cars to fleets (almost none), I since then always ask for Toyotas when I go to the Hertz counter. And lately I only ask for Priuses, and when I got a Nissan Altima hybrid, after a lot of pressure and sewwt talk from the hertz counter person, it was a total piece of crap, ran out of oil (!!) and I returned it with a ruined engine and got another Prius and a $100 gift certificate for my trouble.

    And PS the Nissan Hybrid got ludicrous MPG, only 32-35, while the Prius 50-60, just as the old EPA promised, both in the LA area!

    See?

  24. Nick Stevens Says:

    “..Ironically, SUV’s modified for police use would be even worse gas guzzlers than the sedans they replace, and an SUV’s higher center of gravity creates rollover danger when going around a curve too fast.So I would urge Ford to reconsider their decision to discontinue the Crown Vic even for police use.”

    Ford has not proposed replacing the CV with any SUV, but with a version of the new Taurus, which is FWD, but with the Ecoboost 365 HP engine would be a very strong police car. And is taller than the CV, a bit narrower and with a slightly smaller trunk, maybe.

    But the point is not this, but that most police cars waste most of their time IDLING and waiting to catch a speeder etc, so they are IDEAL for a HYBRID application, and NONE of the cars offered as police cars are hybrids!

  25. Pedro Fernandez Says:

    Thor: don’t you drive a bimmer 7 series? If I had one also, I would find just about anything else inferior to it. You’re spoiled by it!! My friend is a shadetree mechanic, he just got a 98 325 to rebuild and he is impressed by the level of engineering that car has built in, he has worked on various other cars including Japanese makes,and he tells me nothing can compare to it.

  26. mitch weaver Says:

    Now that Toyota and GM have abandoned the NUMMI plant, is it still a UAW shop? Could a new owner come in and start building cars,or anything else, without respecting the union’s interests? What a gut churning question, either way.

  27. Thor Says:

    “Thor: don’t you drive a bimmer 7 series? If I had one also, I would find just about anything else inferior to it. You’re spoiled by it!!”

    I do appreciate the 7, but as I wrote before, that did not stop me from admiring the Prius! Which is a totally different car, but I still enjoyed driving it twice, for 4 days total.

    If a friend in LA asked me what to buy, I’d say the Prius unless he or she is a billionaire and can get a ferrari or a private helicopter! I think the prius is perfect for the pulluted, congested LA area, and they agree with me, there are tons of priuses there. No other 4/5 seat hybrid is as good.

    So I am not that spoiled to expect the dynamics and performance of the 7 in every car I rent (almost all on business trips, so 100% reimbursed).

    But I can say that the 7 whetted my apetite to get a still more exotic and impractical car, such as a porsche 911 (it is not as good a bargain used as a 7, but can still be used everyday) or a Ferrari (a used 355 with low miles, 97 -99 Spyder (convertible) goes for about 60-70k in perfect shape), but a Ferrari cannot be used every day and is too impractical.

    BTW, when i was shopping for a luxury car, I was not even focusing on my 7, but on MErc S class, the 91-99 models, over-the-top huge and powerful (esp the v12 with its 400 hp), which now look dated, but you can buy them cheap,

    and the 5 series BMW 97-03 models because they were available with a 5- or 6-speed manual. I ended getting the 7 because it was a good bargain and was sold by a neigbor so I did not have to waste 2 hours to drive to see it and then if I did not like it to have spent time and fuel unnecessarily.

  28. David B. Fishburn Says:

    Mac, regarding the Equus, who thought of the Grey Poupon? Was it Hyundai’s idea or was it you wanting to pull a prank? I liked that joke, though. It made laugh and remember the commercials for Grey Poupon.

  29. Kit Gerhart Says:

    Police departments don’t need rear drive cars like the Crown Vic, but for reasons of “tradition,” many think they need them. Rear drive cars are good for doing “bootleg turns,” but that is not a technique used much by police today. A police officer friend who used to drive a CV now has a front drive Impala, which he likes better in most ways than the CV.

  30. Pedro Fernandez Says:

    I see a lot of Impalas as secondary police vehicles, but the main police cruise continues to be the CV. and a few Chargers, but an SUV is not safe for high speed maneuvers. Whatever happened to that special police car that was featured in AD a few months back?

  31. Dave Says:

    As a Police officer we have CVPI and they are very poor cars we have trashed a few trans. and 2 motors in the 15 years I have been an officer. We just got a Charger with the Hemi and what a better Police car than the Ford and Chevy. The charger had the elec. system needed and other police friendly things. The ford does not ever have any extra power supply wiring and must put a ton of wires right to the bat. The chevy is very small. I and 6 foot 3 and with the duty belt on and the center consel with the radio and MDTs there is room in the CV and a Ton of room in the Charger, but NO room in the Chevy and mid size SUVs. Also with a vest on you really cant move much. Also the Charger is getting about 50% better mpg with the displacment on demand

  32. Kit Gerhart Says:

    I bet the Charger is also a lot faster than the CV.

  33. Pedro Fernandez Says:

    In So Fla police cars are put up for auction after the dept retires them, they then become taxis and at the end of that life they get bought by ordinary citizens where they still provide years of basic transportation. They have to be the most durable cars I’ve ever seen, those crown vic’s

  34. John Says:

    John McElroy,

    Re:”But analysts at Edmunds point out that the government counted sales according to the type of powertrain in a vehicle, something that has never been done in the history of reporting automotive sales.”

    John, just provide the standard method that has been historically used to count car sales with examples, to defend your point, and quiet the noise.

  35. Kit Gerhart Says:

    I guess different people have different methods of counting cars. Some people say that the Toyota Corolla is the best selling car of all time, never mind that there is no similarity between the early rear-drive cars with the Corolla name and the current front-drive ones. I’d be much more inclined to say that the VW Beetle or Ford Model T was the best selling car.

    Regarding the current “controversy,” I’d have to go with front drive and AWD Escapes being the same car, but I guess I don’t really much care. I DO care, though, about the nonsense of the Corolla being called the best selling car of all time. Not that I have anything against Toyotas. I had a Lexus IS300 for a few years, and it was a great car.

  36. Nick Stevens Says:

    “Cash for Clunkers: Dumbest Program Ever?

    Posted by Chris Edwards

    As the Cash for Clunkers program begins to wind down, I nominate it as the dumbest government program ever. Here is what the program will have accomplished:

    * A few billion dollars worth of wealth was destroyed. About 750,000 cars, many of which could have provided consumer value for many years, were thrown in the trash. Suppose each clunker was worth $3,000 at a guess, that would mean that the government destroyed $2.25 billion of value.
    * Low-income families, who tend to buy used cars, were harmed because the clunkers program will push up used car prices.
    * Taxpayers were ripped off $3 billion. The government took my money to give to people who will buy new cars that are much nicer than mine!
    * The federal bureaucracy has added 1,100 people to handle all the clunker administration. Again, taxpayers are the losers.
    * The environment was not helped. See here and here.
    * The auto industry received a short-term “sugar high” at the expense of lower future sales when the program is over. The program apparently boosted sales by about 750,000 cars this year, but that probably means that sales over the next few years will be about 750,000 lower. The program probably further damaged the longer-term prospects of auto dealers and automakers by diverting their attention from market fundamentals in the scramble for federal cash.”

    John, the above convincing piece disagrees with your own assessment of the program almost 100%. I find its reasoning far more convincing, but if you want to give it another try, or if you want to revise and amend your own remarks, I’d be curious to see it.

  37. Thor Says:

    “but I guess I don’t really much care. I DO care, though, about the nonsense of the Corolla being called the best selling car of all time”

    Numbers do not lie, and there is ZERO nonsense in that. If you do the absolute numbers, the Corolla is by far the best selling car. The VW Bug would be the champ IF VW called the Golf, Rabbit, Skunk or whatever ALSO the Beetle instead, but the Golf looked nothing like the Beetle, and even under the hood it was 100% different.

    Instead of trying to disprove the obvious, you could have said that the Model T was the most INFLUENTIAL model in mass produced autos, or the First, or whatever.

    ALSO, note that when the world population was a mere billion or two, and the US population barely exceeded 100 million, it was far more difficult to sell the same numbers of cars one can sell today to 7 billion people, and 310 million US citizens respectively. So absulute number comparisons are apples and oranges.

  38. Thor Says:

    “Dave Says:
    August 28th, 2009 at 4:00 pm

    As a Police officer..”

    As a police officer, and knowing that your cars are idling for a huige amount of time every day, esp. the ones giving speeding tickets on the highway, don’t you see the obvious need that, no matter what model you prefer, it should be a HYBRID, so it does not use the engine when idling?

  39. Pedro Fernandez Says:

    I remember reading many years ago that the Corolla had overtaken the Beetle as the best selling car in history, just because you don’t like the car, I don’t see why anyone should dispute this. Remember this is not just in the US this is world-wide data. As a matter of fact, here in So. FLa. old, beat up Corollas get shipped to Haiti where voodoo mechanics bring them back to life,(kidding about voodoo mechanics} but their drive-trains still work.

  40. Nick Stevens Says:

    The piece below is 100% opposite of John’s reaction to the program. And I must say, far more convincing to me than anything John said here.

    “Cash for Clunkers: Dumbest Program Ever?

    Posted by Chris Edwards

    As the Cash for Clunkers program begins to wind down, I nominate it as the dumbest government program ever. Here is what the program will have accomplished:

    * A few billion dollars worth of wealth was destroyed. About 750,000 cars, many of which could have provided consumer value for many years, were thrown in the trash. Suppose each clunker was worth $3,000 at a guess, that would mean that the government destroyed $2.25 billion of value.
    * Low-income families, who tend to buy used cars, were harmed because the clunkers program will push up used car prices.
    * Taxpayers were ripped off $3 billion. The government took my money to give to people who will buy new cars that are much nicer than mine!
    * The federal bureaucracy has added 1,100 people to handle all the clunker administration. Again, taxpayers are the losers.
    * The environment was not helped. See here and here.
    * The auto industry received a short-term “sugar high” at the expense of lower future sales when the program is over. The program apparently boosted sales by about 750,000 cars this year, but that probably means that sales over the next few years will be about 750,000 lower. The program probably further damaged the longer-term prospects of auto dealers and automakers by diverting their attention from market fundamentals in the scramble for federal cash.

    Farm subsidies are unjust. Trade restrictions are counter-productive. Energy regulations have done great damage. Housing policies helped cause the financial crisis. But for pure dumbness, Cash for Clunkers takes the cake.

    Chris Edwards “

  41. Nick Stevens Says:

    Here is the first “here” above, link re the environmental damage caused by the clunker program:

    “‘Cash for Clunkers’ Is a Lemon

    Posted by Peter Van Doren

    Jerry Taylor and I published an op-ed criticizing the Cash for Clunkers program on Friday. We weren’t alone in our evaluation of the program.

    Two interesting critical analyses of the Cash for Clunkers program were published over the weekend. The first by New York Times reporter Matt Wald examines the energy savings that would result from the program. If a clunker traveling 12,000 miles at 16 miles per gallon (consuming 750 gallons per year) were traded in for a new car getting 25 mpg while traveling the same distance (480 gallons a year), the the trade-in would save the driver 270 gallons per year. Multiply that by the roughly 245,000 vehicles that had been traded in under the program as of last Friday, before Congress extended the program, and you get 1.6 million barrels saved each year. That sounds great until you realize it’s only about two hours’ worth of our daily consumption, which is about 18.6 million barrels per day so far in 2009. But the savings is probably much less than that because old cars are not driven 12,000 miles per year.

    The second critical analysis, examining the program’s effect on carbon emissions, appeared as a figure in the Outlook section of this weekend’s Washington Post. Over 10 years, the new cars will reduce emissions by 7 million metric tons, which is about 0.04% of the 16 billion metric tons that U.S. cars will produce over that time. That is, taxpayers will pay $147 per ton of CO2 reduction ($1.03 billion dollars divided by 7 million tons). In comparison, the economic literature estimates that the cost of the marginal damages of carbon emissions is between $15 and$50 per ton (see, e.g., this and this).”

  42. pedro Fernandez Says:

    Amen, Nick Stevens. I don’t get the euphoria either.

  43. Nick Stevens Says:

    And the above comments do not include the damage to the environment by the scrapping of these clunkers.

  44. Pedro Fernandez Says:

    Other than natural or man-made disasters, I can’t think of another time when so much destruction of usable, valuable equipment has taken place.

  45. Dave Says:

    @Thor,

    We have dept. in the area is is trying hybrid and with the up front and service cost and the hybrids as of now can not handle all the elec. needs,( 2 or 3 radios, MDTs, lights, in car video, etc) of the police equipment it is not a good choice today. Maybe down the line, but not yet. Also with state cost the Charger Hemi, which had a window sticker for 34 grand!!! cost us 22,500!!! now I get get a hybrid for that!!!

  46. Thor Says:

    Dave,

    Thanks for the info. If the $22.5 is for the modified police Hemi Charger,it is indeed a great bargain, and at least it has cylinder deactivation for economy and sufficient power for most pursuits.

    But all these electr. loads you mention, added together, are probably less than the A/C on a hot day. If you have a full hybrid like the Prius,it probably would handle them,and whenever it needs power, it can turn on the engine.

    It is not that fast, so you would not use it for high speed chases, but very sufficient around town, where it gets 50-60 MPG in the LA area where I drove it for 4 days. COuld only get it to go below 50 MPG (48) on the highway to San Diego, and at 75 MPH on the cruise.

    And it sells for about $25k, so if sold as fleet car I bet you could also get it for $22k if Toyota was interested.

    Another alternative to the hybrid is the start-stop systems in Europe, they save a ton of gas but cost about $1k retail vs the same models without them.

  47. JIm Thykeson Says:

    This program was copied by us to emulate the German success…only thing is the Germans did it for THEIR brands, not ours! We ended up again, subsidizing the foreign brands instead of our own…dumb and dumber.

  48. Nick Stevens Says:

    “only thing is the Germans did it for THEIR brands, not ours!”

    I agree with your post EXCEPT for the above. Germans bought german cars because they are the best in the world, NOT because their Government forbid them to buy Italian or French cars!

    On the COnrtary, our idiotic CFC program DID try to subsidize the domestics when it required the clunkers to get no more than 18 MPG, an MPG so low that can only be attained by the biggest Pickups and SUVs, which are mostly domestic.

    However, the US consumer wisely chose to buy CIVICS and COROLLAS and ACCORDS and FOCUSES instead of the fatass breadvans on stilts.

  49. Tom Tyson Says:

    Dang, we’re hoping that Hyundai will include the “Flying Eagle,” or whatever it is, on the hood of that gawdy Equus when it reaches the US shore!