Cash for clunkers datapoint of the day

By Felix Salmon
November 9, 2009
how cash-for-clunkers played out:

" data-share-img="" data-share="twitter,facebook,linkedin,reddit,google" data-share-count="true">

Good on the AP for FOIAing the details of how cash-for-clunkers played out:

The single most common swap — which occurred more than 8,200 times — involved Ford F-150 pickup owners who took advantage of a government rebate to trade their old trucks for new Ford F-150s. The fuel economy for the new trucks ranged from 15 mpg to 17 mpg based on engine size and other factors, an improvement of just 1 mpg to 3 mpg over the clunkers.

It gets worse:

In at least 145 cases the government reported consumers traded old vehicles that got better than or the same mileage as the new vehicle they purchased. A driver in Negaunee, Mich., traded a 1987 Suburban that got 18 mpg for $3,500 toward a new Silverado pickup that got only 15 mpg. An Indianapolis driver traded a 1985 Mercedes 190 that got 27 mpg for $3,500 toward a new Volkswagen Rabbit that got only 24 mpg.

In at least 15 deals in nine states, owners of large pickups cashed in old trucks for between $3,500 and $4,500 toward new Hummer H3 SUVs that got only 16 mpg.

I think this is safely the worst policy implemented to date by the Obama administration: it has almost nothing in the way of redeeming features. Let’s hope it was some kind of weird aberration.

(HT Hiskes, via)

Comments
15 comments so far

The average mpg of the traded-in vehicles was 15.8, while the average for the new vehicles was 24.9. Those don’t seem like bad results for a program put togethe ron an expedited basis. You are always going to get some bad results and loophole abuse with programs at the margins.

Posted by pickandroll | Report as abusive

And how about the 1998 Dodge Neon and 2008 Hyundai Accent which were traded in? How did these slip by? These were on the PDF list provided from the CARS.GOV website of traded-in vehicles…

The 1998 Neon would have never gotten below 25mpg even with an automatic and it was not on the CARS list of approved trade ins. The 2008 Hyundai Accent actually WAS on the CARS website of approved trade ins yet the EPA.GOV website showed it as getting 28mpg with an automatic transmission. And who would trade in a 2008 car anyhow as it would be worth at least $4500 on the market unless it was totally trashed out…

Posted by econobiker | Report as abusive

The program was miles ahead of the home buyer credit. I say this as someone who could qualify for the home buyer credit and didn’t qualify for cash for clunkers.

I’m measuring cash for clunkers as a stimulus, not as a carbon reduction plan. The money spent was far more stimulative in the case of clunkers than the new home credit.

Posted by zach | Report as abusive

I have to say this is a very strange post from Mr. Salmon– basically cherry-picking his results in order to prove his biases. As the first poster noted average fuel economy was 15.8 to 24.9. I’d also note (per his example) that an improvement from say 13 to 15 or 15 to 17 is, percentage-wise, a (roughly) 15% improvement.

I am very confused as to why he chooses to argue from anecdote when there are actual statistics available.

Where did they get the data on gas mileage for the older cars. Obviously, if they simply used the EPA estimates for the earlier models when they were new, they likely understate the benefits of the program. The mileage data on older cars at http://www.fueleconomy.gov Your MPG seems to be based on uselessly small samples.

Posted by Alan | Report as abusive

I would add (pace the title) that this is less “data” than anecdote.

I believe Felix called it a datapoint, for which “anecdote” could be called a synonym.

In any event, the program can hardly be called a success as either stimulus or for its environemntal benefits.

On the stimulus side, the feds paid people to destroy valuable assets (presumably most of these cars were worth more than nothing). No matter how you look at it, this results in a net destruction of wealth.

On the environmental side, it is unlikely that even the 9 mpg improvement cited above has much net marginal impact.
Many of the people who purchased would have bought soon (let’s say within a couple of years) anyways; they were largely middle class+ people replacing cars worth less than $4,500. If the average improvement was actaully 9 mpg (far beyond the requirements for the program), it is impossible to suggest that it was CARS that convinced most of these people to choose more efficient cars. They could have purchased much less efficient cars and still gotten the credit, so the program can hardly be credited with shifting people’s decisions much on average. The “carbon savings” would on average be due to the few hundred thousand more efficient cars being on the road for a couple of extra years. This doesn’t account for the carbon that was emitted producing all those new cars (i.e., would it have been better for those less efficient cars to keep running for their useful remaining lives than to emit carbon producing replacements early?).

Posted by ateamrules | Report as abusive

145 of 8200 = 1.7%
15 of 8200 = 0.2%

I guess then another way to describe the exact same statistics would be to say:

“Cash-for-clunkers has had a tremendously positive effect on energy consumption. Stats show that over 98% of the trades have resulted in improved fuel efficiency.”

I guess it just depends on whether you are a glass-is-2%-empty, or glass-is-98%-full type of person.

IMO this is the deal-with-the-devil that you make when you commit to such a large and hurried stimulus.

It’s roughly analogous to the decision to go to war. You should think long and hard before you do it, but once you’re committed, you can’t get squeamish at the inevitable atrocities.

These press inquiries are fine, and I’m all for accountability. OTOH, if every 80 years or so we blow a few million on the way to saving the free world, I’m ok with that.

Posted by Jim | Report as abusive

Hmmm. Americans cheat on their taxes? Who would have thought?

Posted by Neil D | Report as abusive

Eric, your numbers aren’t right. The 8200 isn’t the total number of trade ins, it’s the number of F-150s that were exchanged. The 145 and 15 numbers make up a much smaller percentage of the trade ins than you calculate.

@ateamrules: Datapoints and anecdote aren’t synonyms.

Moreover, evaluating stimulus in terms of wealth is incorrect– see “liquidity trap” or more broadly “depression economics.”

“An Indianapolis driver traded a 1985 Mercedes 190 that got 27 mpg”
When it was brand new, maybe..

Posted by whatthefacts | Report as abusive

Poor conclusion to grab headlines. The F150 swaps were 1% of the total cars exchanged in the program.

Posted by JLo | Report as abusive

HORRIBLE SUMMARY of the program. The impression conveyed is NOT accurate. YES, the most common specific model to specific model swap was F-150 for F-150, and yes, other truck for truck specific model deals were high on the list, HOWEVER, the appropriate conclusion to draw here is that the Category 2 truck market is concentrated in a few models, while the passenger car market is not. Specific to Ford — Fewer than 28% of the number of category 2 or 3 Ford trucks traded in (the F-150 is among these) were replaced overall by a a category 2 or 3 Ford truck. This was a common trade-in (9.1% of all trade-ins), but they typically went with a lighter vehicle. The percentage of category 2 or 3 trucks declined from 19% to 7%. Note that 85% of trade-ins were category 1,2 or 3 trucks (only 15% passenger vehicles), but that 59% of new vehicles were passenger cars. Most trade-ins were category 1 trucks (lighter than an F-150), and most of these people bought passenger cars.

Post Your Comment

We welcome comments that advance the story through relevant opinion, anecdotes, links and data. If you see a comment that you believe is irrelevant or inappropriate, you can flag it to our editors by using the report abuse links. Views expressed in the comments do not represent those of Reuters. For more information on our comment policy, see http://blogs.reuters.com/fulldisclosure/2010/09/27/toward-a-more-thoughtful-conversation-on-stories/