clunker-cashOK here we go, another federal program or bail out that may or may not be something you can cash in on. Cash for Clunkers is designed to stimulate the auto industry, help the environment by putting more fuel-efficient models on the road after taking the polluting gas eating ones off the road. OK so far sounds like a program that may be beneficial, so can you cash in on it?

Remember the old saying “the devil is in the details”, let’s take a look at the details. The basic concept is simple, you trade in your old low mileage vehicle for one that meets a higher threshold, the government will pay up to $4,500 to help you with the purchase. There are some rules to this game that you must follow in order to qualify.

1. You must have owned the car for at least one year.
2. The trade in must have a rating of 18 mpg or less.
3. The car you are buying can’t exceed $45,000.
4. The new car must be at least 4 mpg better to receive a $3,500 voucher or 10 mpg better to receive the maximum of $4,500.

Now if you own a light truck or SUV you fall into a little different category.

1. The trade in must have a fuel rating of 18 mpg or less.
2. The new vehicle must get at least 2 mpg better to qualify for $3,500 or 5 mpg better for the $4,500 voucher.

So can we find anything wrong with this program? Sounds like it is designed to stimulate sales and put more fuel efficient cars on the road. I think on the surface this was a program designed with good intent but I wonder if we are not shooting ourselves in the foot. I see a few things I would have changed. First of all this was a program designed to help US auto makers, get that US auto makers. This program should have been limited to only the three auto makers in this country only, period, end of statement. After all those vouchers folks are money that you and I are giving away. So why would we want to help a foreign manufacturer?

Next I would question just how long this program will last, not in money we all the money our presses can print, right? But I focus this question to buyers. There were buyers who were holding off to buy until things got a little better but went after the voucher offer by this program. Where will we be in the next six months? Will the show rooms of our auto dealers be completely deserted?

There is another industry tied to the new car industry that has been completely ignored in this whole process. The used car business is now truly in trouble because of this program, what will the government do for them? One last item to consider. There is now a less supply of cars that consumers can buy for under $2,500 because they were destroyed because of this program, what are these buyers to do in the future. And finally are the dealers going to see the money in a timely manner once they submit it to the government for refund? Remember this is the government we are talking about it, it takes them forever to get anything done. I don’t think they do it on purpose, I think they just a problem thinking things through.

I think we will all have to sit and wait for the final results of this program. I for one have concern that in six months we are going to be hearing a lot of complaining because of this program.

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