Cash for Clunkers has been rundown by teabaggers opposing health reform as an example of federal management incompetence. But the program has a lot of fans. In addition to the thousands of consumers who took advantage of the Cash for Clunkers auto trade-in deal, the Economic Policy Institute reports this week that the program has been a boon to consumption in the recession economy and a boon as well for the environment, moving gas guzzlers off the roads. The New York Times likewise did “clunker calculus” this weekend and found the benefits inescapable.
Today, Tim Jackson, president of the Colorado Automobile Dealers Association, sent around an op-ed to state media outlets offering unmitigated praise for the program.
Jackson doesn’t have a political dog in this fight, he told the Colorado Independent in a recent interview. He just likes Cash for Clunkers. He said he went to the “historic” DNC but that he “doesn’t fall neatly into the Obama crowd per se.”
“I just support his leadership in making this program happen.”
He said people second-guessing the program believe these cars would have been sold anyway. He has a different take.
“They believe we were pulling sales forward, as we say in the industry, selling cars now that we would have sold in the fall… There’s no way to know for sure, but I think maybe we were making up for lost sales.”
Jackson points to the drop off in consumer confidence that marked December through March.
“Confidence was at an all-time low, and cars are a big ticket item. If you don’t have [confidence], you don’t make that purchase. People started buying again. I see this program as the trigger for that.”
On the ground at a dealership the message was clear.
“The program went into effect two weeks ago. It started Friday, July 24th, at 5 a.m. on the East Coast. Dealers here in Colorado started selling cars under the program that afternoon. The program funding just about didn’t make it out of the first week.”
If he were king for a day, Jackson said, he would take the program even further. The stimulus benefits are clear but the ancillary benefits have been underplayed.
Removing “brown cloud” air-borne particulates, the kind of tail-pipe emissions that affect the ozone layer and exacerbate asthma, is a relatively simple formula, Jackson said. Removing merely 150 “high-emitter” vehicles– cars 15 years old or more– would take Denver out of the EPA failing category on “brown cloud” into the passing category.
“Now imagine if we took 5,000 of those clunkers, if you will, out of circulation. The problem with the program is: Why stop at 1984? If you take one 20-year-old car off the road, that is equal to taking new cars– cars in the showroom today– it’s like taking 100 of those new cars off the road. Cash for Clunkers offers the trade-in money for vehicles 10 to 25 years old. Why not 35-year-old cars? They’re even worse.
“When one of those is in front of you on the street and the light turns green, you’re going to hold back as that exhaust pours out. The public policy ramifications of getting those [cars] off the road are enormous.”
An excerpt from Jackson’s op-ed:
Coming during the longest and most severe downturn in automobile industry history, [Cash for Clunkers] was just what the economy needed in order to stem the tide of massive job losses and start turning the corner toward positive results.
Nationally, about 900 franchised dealerships closed in 2008, reducing the U.S. total to about 19,000. Another 1,100 dealerships are expected to close in 2009. Closer to home, five Colorado dealerships closed in 2008 and 19 dealerships in the state have already closed so far this year.
The challenge facing the auto industry is not just an issue for traditional manufacturing states like Michigan.
According to an analysis of the economic impact of new vehicle dealers on Colorado in 2007:
• The automobile retailing industry generated a total of nearly 30,000 jobs in the state, with the average dealership providing jobs for 73 people.
• Colorado residents earned more than $1.5 billion as a result of automobile dealership operations.
• Colorado automobile dealers (through taxes collected or paid) generated more than $418 million in revenue for the state and local governments. In fact, sales of new and used cars, as well as parts and service, are the single largest source of sales tax revenue for almost every state, city and county government nationally.
• Colorado dealerships contributed over $6.1 million to charitable causes.
The program is designed specifically to get drivers into more fuel efficient vehicles and it is working. A U.S. transportation department analysis shows that through Aug. 1, cars sold under the program averaged 25.4 miles per gallon, a 61 percent increase over the 15.8 mpg average of the trade-ins, according to Automotive News.
Besides saving drivers money at the pump, that means that the nation is becoming less dependent on foreign oil.