Lease a Cleaner Vehicle for $1: Yours!
Entertaining and educating owners and drivers is great, but why stop there? I've been thinking about how this fuel economy demonstration trip could just as easily become a regular "Trick Your Truck for Fuel Economy" program.
If you were really ambitious, it could become a story about what our government could have accomplished in comparision to the ineffective spending spree known as "Cash for Clunkers". Before bringing out my proposal, I want to make sure we understand why we souldn't repeat this dismal failure.
What Went Wrong
While now history, the Consumer Assistance to Recycle and Save Act administered by the NHTSA as the Car Allowance Rebate System (CARS) a.k.a., "Cash for Clunkers", program was wildly popular. The government rarely hands out money without it being popular, and this program was no exception.
Anyone that's remotely concerned about the environment could tell you that there were many better uses for the money. The program, however, had all makings of a typical government spending initiative:
- If you could already qualify for a new car loan or buy one outright, then we gave you up to $4,500.
- If you were a member of the working poor and could not participate, we stuck you with the bill for the project in the form of higher taxes and bigger deficits
- We tried to bail out bankrupt automakers that had resisted attaining new emissions and economy standards for decades.
- We ended up significantly boosting the market share for Japanese and Korean automakers.
- We rewarded people that had made poor decisions about buying gas-guzzlers by bailing them out.
- The new car sales that did occur simply shifted forward purchases that would have been made later anyway. Sales fell sharply for the months following the incentive.
- Selling new cars, and not reducing emissions, was clearly the primary goal. Trade in a light truck for a vehicle with only two miles per gallon better fuel economy and you would get $3,500.
- Structured differently, we could have helped lower income Americans address transportation needs.
- Without the program we could have avoided all the energy required and emissions produced in transporting, shredding, sorting and smelting of the recycled vehicles
- We could have avoided the tons of GHGs associated with the production of a new vehicle.
- Shredding 700,000 cheap old vehicles drove up the cost of old used cars, and so we raised the cost of transportation on the people that could already least afford it.
The Wall Street Journal had some sage observations:
"The basic fallacy of cash for clunkers is that you can somehow create wealth by destroying existing assets that are still productive, in this case cars that still work. Under the program, auto dealers were required to destroy the car engines of trade-ins with a sodium silicate solution, then smash them and send them to the junk yard.
"As the journalist Henry Hazlitt wrote in his classic, 'Economics in One Lesson,' you can't raise living standards by breaking windows so some people can get jobs repairing them."
Clean, Affordable Transportation for $1
Imagine for a moment that you owned clunker that you couldn't afford to sufficiently repair and could not qualify for a new vehicle loan (this describes millions of Americans). Then suppose there was a government program that would buy your old out-of-tune emissions-tampered vehicle from you for a nominal sum, repair it, and then lease it back to you for $1 (pick a number) per year.
You would not have to maintain the emissions systems, but you could not tamper with them. Anything of the sort would result in a dramatically higher lease rate or outright reposession of the vehicle.
With the advancement of electronics and GPS systems, I can image that it would be easy to cheaply achieve far greater savings and emissions reductions thru driver behavior modification for some of these same vehicles.
With a GPS unit attached to a recording device the vehicle would always know how fast the driver was traveling relative to the posted speed. You could incentivize driving behavior with fuel discounts or with other relevant incentives for good driving behavior.
Suppose you had a target of not traveling above 5mph of the posted speed for more than 10 percent of the time? I can imagine that some financially strapped owners might volunteer for this part of the system with the extra incentives. Compared to "Cash for Clunkers" a program like this would achieve real, lasting savings in fuel consumption and an equally lasting reduction in emissions.
I know my own story suggests that repairing old vehicles is cost prohibitive, but that need not be the case. I wanted everything to work perfectly, and I paid thru the nose for that distinction. Targeted repairs to emissions were not that expensive. The brand new stainless steel catalytic converter was only $150. Other replacement units were available for considerably less. A rebuilt air pump was also $150. There were other emissions repairs, but for core emissions repairs alone the total was well under $1,000. It was a smooth and clean running truck again that would pass any emissions test for that model year hands down.
Fixing the Conflicting Incentives of Automakers and Dealers
Having older trucks and SUVs on the road would not be such an issue if the emissions systems and powertrains were well maintained. Unfortunately the politically powerful automakers and dealerships don't share this objective at present because of how they make their money. The incentives are just not what they need to be for making trucks and SUVs greener throughout their useful working lives, but this could change. Before discussing a solution, here's a quick look at some underlying economic factors ..
Most drivers don't realize this, but new auto dealers rarely make significant money on new vehicle sales. They might get to keep a small percentage incentive called the "holdback", but this is more than eaten up in advertising expenses and the interest expense of keeping new vehicles on the lot until they are sold. They make so little that unless it's a luxury brand, like Lexus, dealerships typically pay sales reps a flat $100 per vehicle sold.
Dealerships make far more money selling used vehicles and providing out of warranty service. A quick example: A few years back my 2006 Jetta was hit by another driver while parked on the street, so I traded it for an advertising "loss leader" 2007 Passat. I got $16,000 in trade for the Jetta, and because of a dealer computer screw-up, I received an email which revealed the name of the person that bought it. Contacting that buyer I discovered that he had paid $20,000 for my old car. It's this kind of information that dealers don't want you to know, and the dealership owner was livid that I had found out.
Profiting on older vehicles: What if a customer with one broken emissions, old polluting car could drive it on a dealer's lot and the dealer could make money thru government incentives by having him drive a repaired / cleaner vehicle off the lot? What if the dealer could make money by "upselling" features that the buyer / lessee wanted but didn't have in the trade vehicle? Parts manufacturers would make money by suppling the parts needed to make the car run better and cleaner. If warranted, major assemblies, like engines or transmissions, could be shipped back to the automaker for a 2nd trip down the assembly line for the latest version of computerized engine control, fuel injection or the like. That would give automakers a piece of the action.
Many of these steps would create jobs in cities and towns across America -- ones that could not be exported overseas. As an extra solution to the problem of emissions, this one does not involve tons of additional GHGs for destroying some vehicles and building replacements. The exact ratio of purchase and lease back or trading cleaner can be resolved later, but making the existing fleet run cleaner seems like an obvious win.