Buyers used clunkers program to buy gas guzzlers

Billed as a way for the government to put more fuel-efficient vehicles on highways, the popular $3 billion Cash for Clunkers program mostly involved swaps of old Ford or Chevrolet pickups for new ones that got only marginally better gas mileage, according to an analysis of new federal data by The Associated Press.

The single most common swap — which occurred more than 8,200 times — involved Ford F150 pickup owners who took advantage of a government rebate to trade their old trucks for new Ford F150s. They were 17 times more likely to buy a new F150 than, say, a Toyota Prius. 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.

Owners of thousands more large, old Chevrolet and Dodge pickups bought new Silverado and Ram trucks, also with only barely improved mileage in the middle teens, according to AP’s analysis of sales of $15.2 billion worth of vehicles at nearly 19,000 car dealerships in every state. Those deals helped the Ford F150 and Chevy Silverado — along with Ford’s Escape midsize SUV — climb into the Top 10 most-popular vehicles purchased with the government rebates. The most common truck-for-truck and truck-for-SUV deals totaled at least $911 million.

In scores of deals, the government reported spending a total of $562,500 in rebates for new cars and trucks that got worse or the same mileage as the trade-ins — in apparent violation of the program’s requirements. The government said it is investigating those reports and said in some cases they were probably entered incorrectly by dealers or based on outdated fuel economy figures.

The National Highway Traffic Safety Administration is still reviewing the reports, and any dealers that submitted invalid trade-ins will be directed to return the government rebate, spokesman Eric Bolton said.

The new data, obtained by the AP under the Freedom of Information Act, include details of 677,081 clunker trade-ins processed by the government through Oct. 16. More than 95,000 of the new vehicles purchased under the program — or about 1 in 7 — got less than 20 mpg, according to the data.

The new figures, requested four months ago by the AP, represent the first substantial outside accounting of the clunkers program, lauded by the White House and the Transportation Department for improving fuel economy, stimulating sales and taking the dirtiest vehicles off the road. The data show the average fuel economy was 15.8 mpg for the old vehicles and 24.9 for the new ones.

The overall mileage increases over the clunker fleet represent a decline of 1.87 million tons of carbon dioxide per year, based on families driving an average of 12,000 miles, a yearly savings equivalent to the amount of carbon dioxide spewed in the U.S. in just 2.5 hours.

But plenty of consumers bought relatively low-mileage trucks and SUVs with the help of government checks.

“If we’re looking for the environmental story here, we’re going to be disappointed,” said Jeremy Anwyl, chief executive at Edmunds.com, an analyst firm. “It might have started out from the perspective of improving the environment, but it got detoured as a way to stimulate the economy.”

Popular high-mileage commuter cars, including the Toyota Corolla, Honda Civic, Toyota Camry and Ford Focus, also were among the Top 10 most popular new vehicles bought under the four-week program, with 105,280 of those models sold for a total of about $2 billion.

Bolton, the NHTSA spokesman, said the program “proved to be a win for the economy and the environment” because it helped financially struggling dealerships and auto manufacturers, and because, under the program’s rules, clunkers necessarily were replaced with vehicles that got better mileage.

Chris Moss of Smithtown, N.Y., traded in his 1992 white Ford F150 pickup — “it had 5 million miles on it and needed $50,000 in repairs, if you know what I mean” — for a new Chevrolet Malibu hybrid for his wife. When he drove his old truck to the dealership’s back lot with the rest of the clunkers, “90 percent of what you saw were old 150s and Explorers,” he said. Moss posted a video on YouTube of his old truck’s final day, called “Rust In Peace.”

The $3 billion program, known officially as the Car Allowance Rebate System, ran from July 27 to Aug. 25 and generally required that new vehicles get better mileage — at least 22 mpg for cars and either 15 mpg or 18 mpg for trucks, depending on class — and that trade-ins get no more than 18 mpg. The trade-ins were required to be destroyed in exchange for either $3,500 or $4,500 rebates.

Some deals raise eyebrows:

• In at least 145 cases, mostly involving trucks, the government reported consumers traded old vehicles that got better than or the same mileage as the new vehicle they purchased. The government said it was continuing to investigate. “It’s possible some quirky deal slipped through the cracks,” Anwyl said.

• 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.

• In at least 32 deals, drivers traded older vehicles for new large trucks — including versions of Toyota Tundras, GMC Sierras, Chevrolet Silverados, Dodge Rams and Ford F150 pickups — that got only 14 mpg.

Car-crazy California led clunker sales with more than 76,000 trade-ins, followed by Texas with roughly 43,000 and New York with nearly 37,000. In California, the Honda Civic was the No. 1 new car and no pickups ranked higher than 18th. In New York, the Hyundai Elantra was No. 1.

The clunkers program was very good for Longo Toyota of El Monte, Calif., just east of Los Angeles, which sold more than twice as many vehicles under the program as any other dealership in the country, worth more than $30 million. That sole dealership was responsible for 1,432 sales worth nearly $6 million in clunkers rebates, mostly from its sales of 323 Toyota Camrys, 277 Corollas and 171 Priuses.

“We knew it was just a matter of when, not if, we were going to get paid, so we kept our foot on the gas,” Longo president Tom Rudnai said.

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On the Net:

Cash for Clunkers data: http://www.cars.gov/carsreport

12 Responses to "Buyers used clunkers program to buy gas guzzlers"

  1. griff  November 5, 2009 at 8:13 am

    Yep. Savin’ the earth…one bad government program after another. I’m glad my tax dollars helped other folks upgrade their vehicles.

  2. MightyMo  November 5, 2009 at 11:51 am

    Yep, always pays to be negative. No government program worth so many dollars, in fact barely any non-government program as well, is going to go off without some sort of cheating or stealing. In this case I say the program was an overall success. Sure, it could have been more effectice, but I suspect that to have it implemented quickly, concessions were made such as allowing trucks and lower gas mileage vehicles to be purchased. Everyone always seems to gripe about these programs unless they are a beneficiary.

  3. katiesamson  November 5, 2009 at 11:36 am

    In the UK this program is actually going really well. More and more people are buying new cars, perhaps a sign that the economy is changing? Or perhaps the MOT test is looming and perhaps it’s just easier to get a new or newish car than fork out for the cost of repairs.

  4. issodhos  November 5, 2009 at 12:30 pm

    Of course, it would depend on how one measures success, I guess. It certainly made used vehicles less affordable to those folks dependent upon them. And used parts for the vehicles that were destroyed are going to cost more for the guys and gals who are dependent on older model cars to get to work — or look for work. It helped to clear some coporately owned overstock. It put a smile on the faces of new car dealership owners. It may have kept some dealership employees temporarily on the payroll. It succeeded in transfering one taxpayer’s earnings to another person, but that is not an increase in wealth. So, how do you see it as being an “overall success”?

    And if it was such a ‘success’ perhaps a similar program directed at homes would be a good idea. How about a program that gives a subsidy to anyone who turns in their old home for a newly constructed, more energy efficient home? The old home would of course have to be destroyed. That would certainly set us in the direction of re-inflating the prices of homes.:-)
    Yours in musing,
    Issodhos

  5. almandine  November 5, 2009 at 2:43 pm

    Cheating or stealing? Bullshit.

    Those folks merely used the program according to the rules. Other sources indicate each cash-for-clunker deal cost $24K on average. Not worth griping about? You must have a much bigger income than most of us.

    I’ve got some taxes you can pay.

  6. griff  November 5, 2009 at 5:02 pm

    So do tell…what was so successful about this program?

    That at the height of the deflation of the largest debt bubble in history tens of thousands of people were encouraged to trade in good working vehicles and take on more debt, at the expense of billions of taxpayer money.

    Or perhaps it’s the fact that they traded in low-mileage vehicles for more low-mileage vehicles while their trade-ins were forbidded for resale? Kind of defeats one of the main incentives for the program, which was to get low-mileage vehicles off the streets.

    So people that couldn’t afford new cars were blocked from acquiring affordable vehicles. Makes a lot of sense.

    I wonder how many of those vehicles will be repossessed in the coming years when these people lose their jobs.

    Or maybe it was the artificial bump in car sales by people that were possibly going to wait a while for a new car or people that wouldn’t have made a purchase at all.

    And no I wasn’t a beneficiary. I have a problem taking money from the government, particularly because I realize that the government doesn’t actually have any money other than what they take from us. In fact a little more than three years ago I traded my gas-guzzling Hemi Durango for a more efficient Toyota Rav4, in the process losing five thousand dollars.

    But I guess you’re right…if I was more positive things would have been different.

  7. Kent.Shaw  November 5, 2009 at 7:35 pm

    “It succeeded in transfering one taxpayer’s earnings to another person, but that is not an increase in wealth.”

    Good point. I would have preferred a rebate of some of my tax dollars. I could have used them to stimulate the economy.

    Kent Shaw

  8. Carl Nemo  November 5, 2009 at 12:48 pm

    I witnessed this swapping of one gas guzzler for another in my rurual area. Evidently folks didn’t get the message after one of the worst gas price increases in our times.

    Within two years or less gasoline will be back in the $4.50-5.00 range and there will be no pullbacks as in the past. Major oil fields worldwide have passed peak production and are dropping off at a rapid rate by the month.

    Also this “clunkers” program is indicative as to how our government will continue to plunder the TARP money; ie.., whatever is left to bail out the banking and insurance sectors while Obama’s stimulus money will be slowly but surely misspent too with minimal oversight. So folks can imagine how efficient this new healthcare nightmare that they are soon to launch upon us will function. I guarantee within a few short years of implementation the GAO will be reporting massive fraud and waste within that program too.

    Oh well, its only counterfeit, “funnymoney”. Any losses are simply imagined, no differently than our undying faith in a failed currency paradigm, and that cheap gasoline will be here forever. / : |

    Carl Nemo **==

  9. woody188  November 5, 2009 at 8:25 pm

    Cash for Clunkers cost government some $24,000 per vehicle sold. Guess the government isn’t better at running car companies.

  10. Carl Nemo  November 5, 2009 at 8:43 pm

    Thanks Woody188 for the U.S. Government efficiency update!

    Yep, Socialist doctrine failure at its best…no?!

    Carl Nemo **==

  11. bryan mcclellan  November 5, 2009 at 9:06 pm

    FORD is advertised as healthy and still foisting cutbacks and outsourcing of American jobs as my ledge creeps ever smaller neath.
    Hows that barbecue now?

    It’s simple’
    new tooling,
    if you stand for for gettin retoooled.

  12. woody188  November 6, 2009 at 11:42 pm

    When they announced profit I immediately wondered how much of that was from Cash for Clunkers. Sounds like most of it.

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