Cash for Clunkers Only Buys Future Clunkers, not Future Cars

Clunk. Timing is everything, it really is.

I spent last night looking for one solid, informed voice that praised the government's Cash for Clunkers program. I didn't find it. Some highlights:

Princeton economics professor Alan Blinder's August 2008 op-ed piece for the New York Times in which he essentially pitches the program (and coins the term). Steven Levitt of Freakanomics fame was an instant opponent.

A year later, Edmunds.com CEO Jeremy Anwyl slammed the program in the WSJ. Forbes' libertarian columnist Richard Epstein trashed it. The New Republic's Branford Plumer was less critical, while Rick Newman of US News & World Report mostly noted the bad points.

There's so much negativity about the program that I wanted to find a voice that countered all that. I never really did. For good reason.

What troubles me is the timing. Why now? Why not hold out another 6-12 months, until we really start to see alt vehicles reaching the market? Well before the bailouts I suggested that we let the Big 3 eat shit, use their backruptcy as an opportunity to promote alternative fuels and to fill the gaping market with these vehicles. That opportunity is long gone.

Cash for Clunkers seemed like that rare second chance—not to wipe out the Big 3, but to promote hybrids and PHEV's in a big way. In other words, a program that insisted that the federal trade-in value NOT go towards a future clunker already in the Detroit line-up that earns only slightly better mileage, but towards a future car: The Aptera, the Volt, even one of those horrendous vehicles from Chrysler's GEM line—right, an NEV.

An NEV wouldn't be practical for everyone looking to join the program, but why does the program have to be so practical? As is, Cash for Clunkers looks like Detroit Bailout Part II.

This sucks. Hundreds of thousands of car buyers or mere opportunists will, thanks to the program, own a new car that will, in most respects, be nothing more than a clunker of the future. Chrysler and GM filed chapter 11 in part because their products sucked; a $4500 federal mark-down doesn't make many of these cars any better. It just makes them cheaper, a status these cars can hardly afford.

This entire set of consumers has been eliminated from the future automotive market, likely for years. It's a f**king waste.