The cash-for-clunkers program has been hailed as a success and has just been replenished by Congress. It has boosted vehicle sales and generated some excitement in auto showrooms. But many are using the program to buy new pickup trucks and SUVs.
That fact should be instructive to Congress and the Obama administration. Vehicle buyers still like their trucks and SUVs and future government policy should take account of that fact. If government wants to nudge buyers toward smaller, more fuel-efficient vehicles, it's time to talk about a gas tax hike.
The cash-for-clunkers program offered consumers up to $4,500 to trade in their used vehicle for a new, more fuel-efficient one. The program quickly ran out of money and new funds had to be allocated.
Analysts credited the clunker program with boosting July auto sales above the level they could have otherwise been expected to reach.
Early data from the National Highway Traffic Safety Administration showed the leading choice for buyers trading their clunkers to be the Ford Focus. The top 10 included the Ford Escape, an SUV, and the Dodge Caliber, a hatchback that could qualify as a small SUV. The rest were mostly small cars.
But Edmunds.com, an auto sales analysis website, recalculated the top 10 selling vehicles using standard vehicle sales analysis methods. The government divided truck and SUV purchases by each model variation of such vehicles, which diluted their sales totals.
When all sales of such vehicles were counted together by Edmunds.com, two popular pickups, the Ford F-150 series and the Chevy Silverado, joined the top 10 choices for clunker traders. The Ford Escape SUV became the most popular choice, and the Jeep Patriot SUV joined the top 10 as well.
To qualify for an incentive, the mileage gains, particularly for trucks, did not have to be all that great — as little as 2 miles per gallon for light trucks and one mile per gallon for large trucks. This isn't going to get the vehicle fleet average to 35 miles per gallon by 2016.
When four of the top 10 sellers in a program designed to increase fuel-economy as well as stimulate vehicle sales are trucks or SUVs, buyer preferences become clear. Ratcheting up fuel-efficiency requirements on auto producers won't be as effective as something much simpler — if more politically painful: Increasing federal gasoline taxes.
REPRINTED FROM THE DETROIT NEWS.
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