Real Wheels: Cash For Clunkers and More
Friday, July 31, 2009; 11:00 AM
Washington Post cars columnist Warren Brown was online Friday, July 31, at 11 a.m. ET to discuss the auto industry and offer purchase advice to readers. Brown has covered the cars industry for The Washington Post since 1982.
The transcript follows.
Warren Brown: Today's news:
At this writing, the Car Allowance Rebate System (CARS or cash-for-clunkers) program remains in effect, according to the National Automobile Dealers Association and the Washington Area New Automobile Dealers Association.
However, based on currently contracted CARS sales, approaching 200,000 nationwide, the initial federal allotment of $1 million for the program will be exhausted well before the scheduled end date of Nov. 1.
Lawmakers and auto industry lobbyists, at this moment, are trying to put together a program extension. We should have word on the success or failure of those efforts later today.
The current push, certainly on the part o car dealer, is to get a definitive answer on a CARS program extension by close of business Friday, July 31 (a.k.a. today).
Such an announcement, those dealers believe, could give them the single best sales weekend they've had in 12 months.
Already, industry analysts are predicting that the initial overwhelming consumer response to the CARS program will boost annual US. market auto sales, once struggling to reach 9-million new units sold, to 10.7 million units or higher. If so, score one solid stimulus win for the Obama administration.
But it remains to be seen if the CARS program will do anything to lower gasoline consumption in the United States. Here's betting that it won't. Good morning, people. Let's talk.
Washington, D.C.: Warren, please help! Unfortunately, I need to change my car (repairs will exceed the value). I'm looking for a small, hybrid SUV, but no carmaker makes them!? If Toyota can make a Prius that gets 45 mpg, why can't it make a RAV 4 or similar that gets 30 mpg as a hybrid? If you have pull with Toyota, Honda, or Subaru (the ones recommended for safety/reliability by Consumer Reports) would you please ask them? How long will I have to wait for a car like that?
Warren Brown: Dear D.C.
The Ford Escape Hybrid, a compact SUV, gets 35 mpg.
Chevrolet Equinox also has a hybrid.
Please recheck Toyota. They have a hybrid compact, too.
Stafford, Va.: What is "drive-by-wire?" I'm looking at Honda CRV's and I'd appreciate your input. I believe that the gas pedal is sensor-controlled (?) Suppose the sensor fails? Thanks!
Warren Brown: You've got it, Stafford. Drive-by-wire replaces your cable interactions with algorithms, sensors and electronic pulses--all yielding greater operational efficiency. What happens if those sensors fail? Think of it this way: What happens if your cables fail? The question is whether you believe cables are more robust than sensors. I'd rather take my chances with sensors.
S. Rockville, Md.: Warren, May I vent here? The CARS program is absurd. I have a 13-year-old sedan I'm ready to dump and move onto something new, but it gets 23mpg combined and doesn't qualify. Meanwhile, my six-year-old SUV qualifies, but it's running great, polluting less, and serving me better than my sedan. Now I'm more likely to throw a couple thousand into service on the sedan and drive it two or three more years and not buy new for a while. Who's bright idea was CARS anyway?
Warren Brown: Dear S. Rockville:
As you have read in this space many times, CARS is a badly executed idea chasing two good causes--increased vehicle sales and decreased fuel consumption. As we predicted here, it did stimulate sales. From the viewpoint of car manufacturers and dealers, that is a very good thing. But in terms of fuel conservation, it's dumb, primarily because it does what all other putative federal fuel economy efforts have done: It works only one side, the industrial side, of an equation with two sides--industrial and consumer.
Giving consumers a rebate to buy supposedly more fuel-efficient vehicles will not save fuel. It simply reduces their cost of vehicle ownership and driving, which generally leads to more driving, as evidenced by miles driven by owners of Toyota Prius cars versus miles driven by owners of more consumptive vehicles--25 percent more miles driven than non-Prius owners.
Thus, we have your situation. So, here's what I'd do:
Go ahead and repair your sedan.
Keep your SUV.
Use your SUV only when it makes the best sense to use it.
Use your sedan accordingly.
You won't have a new vehicle. But here's betting you will save fuel and money.
Reston, Va.: I drive an old Toyota and have been thinking about buying a new car with the cash-for-clunker. The thing that has kept me away is the paperwork.
That is to say, the paperwork is an unknown world. I don't know what to expect. Will the dealership require me to sign forms for access to the program?
If I receive cash for the transaction, will that cash be taxed as ordinary income, or will I have to get an accountant to figure it all out in terms of valuation?
Warren Brown: Good questions, Reston. Go to your favorite Toyota dealer. Seriously. The dealers have been admiringly quick studies on CARS particulars. They can walk you through the thickets. My hunch is that, if we learn by the end of the day that CARS is in abeyance (and here's betting against that), lots of dealers will still make you a CARS-like deal. And here's the kicker: IF YOU HAVE ANY PROBLEM, CONTACT ME AT WARBRO70@AOL.COM, BRIAN ARMSTEAD AT AUTOSENSE@COMCAST.NET, OR LOU ANNE HAMMOND AT WWW.CARLIST.COM. The three of us are monitoring consumer interaction with CARS and will discuss it more on my radio show "On Wheels" with Armstead and Hammond, 12 noon to 1 PM Sundays, WMET World Radio, 1160 on the AM dial, www.wmet1160.com, 866-369-1160. We're there for you.
Arlington, Va.: CARS worked out for me. Went from a '98 minivan to a Jetta TDI. Doing my part for the economy and a little bit for the environment (I hope). After just one week in the TDI, I think it's a nice little car.
Warren Brown: Great news, Arlington.
Williamsburg, Va.: Mr. Brown, first, congratulations on your fine career at the Post. I admired you in a number of ways, including for your fine writing and the intellectual courage (I think that's a fair word) it took for an African American public figure to be something other than a dyed-in-the-wool Democrat.
Second, a question: have you ever heard of a newspaper, other media outlet, or car-selling Web site hosting a private-party car sale. In other words: replicating the classified ads, but in one physical location (e.g.., a rented parking lot). Seems like a nice idea, and a way for individual sellers to compete better with auto dealers. Thanks for your time.
Warren Brown: Thank you, Williamsburg. It was easy for me to be something other than a dyed-in-the-wool Democrat. I was born a Republican. Why? We liked the Republicans because they freed the slaves. Lincoln, remember? We didn't leave the Republican Party. The Republican Party left us. The way many folks in my family figure it, that's the Republican Party's loss and the Democratic Party's gain. But, truth be told, our soul is essentially Republican.
For your second question:
Yes, I've heard of several of those efforts. I've got to check them out. I'll have my California colleague, Lou Ann Hammond, check out that one. She's nuts on retail trends.
Twitter?: Hey, Warren -- the other day I received an email at my work address with the title "Warren Brown wants to keep up with you on Twitter"
I didn't click through, because the email address isn't the one I used to register with the Post and I didn't want malware. Did you send those out, or use one of those PR shops that do email blasts?
Warren Brown: TO ALL TWEETED BY ME:
I answered an e-mail from a colleague who tweets and who, in turn, invited me to join twitter, which was remarkably easy to do, and which I did. Upon which, apparently, I automatically tweeted my friends, who, of course, include all of you. And my friends, having been tweeted, thus tweeted me inquiring about twitter. Whereupon I'm left to conclude that twitter is a vast multi-winged conspiracy to lock us all in permanent tweet.
New model?: Warren, I realize this may be a bad time to bring out new configurations of cars, but the other day I found myself looking at a Thunderbird and wondering if Ford had considered a hybrid version. I know I'd be interested, but do you think there would be a market for it?
Warren Brown: There might be a market for it among eco-conscious baby boomers who, despite the recent ravages of a collapsed economy, remain the most eligible buyers for almost everything--especially now that the stock market has restored some of our egregious retirement savings losses. If it happens, it should be launched as a limited-niche mobile. Personally, I like that thought. Thanks.
New England: The draining of the CARS account certainly suggests that there is pent-up consumer demand for cars (and other goods, I'm willing to bet.) The question is, will qualified buyers be able to get credit? One reason the housing market isn't rebounding is that responsible, qualified buyers are getting caught up in overly tight new credit rules. I wonder if the majority of those who apply for the funds will actually get the loan they need.
Warren Brown: I agree, New England. The banks and financial institutions have to do a better job of looking at their customers, particularly their longtime loyalists with good payment histories. There IS a lot of pent-up demand out there for cars and houses. But too many banks are behaving as consumer enemies instead of consumer partners.
It seems to me that smart banks would launch campaigns to work with and counsel consumers who have established a record of at least trying to do right.
Bethesda, Md.: Hi Warren! Love the chats. I have a 1998 Nissan Pathfinder SE 4WD with 92K miles. Love the vehicle, and it still looks great due to being garaged 95% of the time. Other than a cracked power steering rack 5 years ago that cost $2600 to fix, it's just required normal maintenance and I have not had any trouble with it. I just spent $2300 to have many of the original parts replaced at the dealer's recommendation though - shocks, struts, belts, gaskets, bearings, packing, hoses - since they told me they were just wearing out due to old age. Friends think I was dumb for doing so and should just get a new vehicle. The way I drive, I should get at least another 5 years out of it. When is it time to stop putting $$ into a car? Cash for Clunkers program has got me thinking more about a new vehicle. Any thoughts? Thanks!
Warren Brown: Dear Bethesda:
Why spend money that need not be spent? It sounds as if your Pathfinder can go another 100,000 miles with few, if any, problems. The money you've spent on repairs is little in comparison with what you will spend on a new vehicle. As for the environment: Continue to drive wisely and keep your Pathfinder in good repair. That will help.
Frankly, we all need to just deal with the truth: There's no free ride with the environment or energy conservation. One way or another, we'll pay.
Bonifay, Fla.: Hi Warren, 2010 Ford Transit Connect vans are on Washington D.C. area lots. What gas mileage might I expect, or are they geared to be merely delivery step vans? How bad is the over the road ride, or again like a step van?
Warren Brown: Hello, Bonifay:
I hope within the next two weeks to do an extended run (about 600 miles) in the Ford Transit Connect. I'll let you know then. Take care.
Congress Daily reports "More $$ for CARS": As of 11:30, Congress Daily reports: "MORE CASH, MORE CLUNKERS. The House today plans to move a bill that would add $2 billion in federal stimulus money to the depleted "Cash for Clunkers" program. The money will come from a program for renewable energy loan guarantees. "We believe that $2 billion will give us a nice solid amount to move additional cars off the lot," said Rep. Betty Sutton, D-Ohio. Despite quick House action, the measure could still run out of gas in the Senate, where Sen. Debbie Stabenow, D-Mich., said supporters would "try -to] pass it" with help from the White House. But one Senate Democratic leadership aide cautioned the bill might not even get to the floor before senators leave for the August recess next Friday. In addition to a busy schedule, fast action might be complicated by efforts by Sens. Susan Collins, R-Maine, and Dianne Feinstein, D-Calif., to toughen efficiency standards in the program."
Warren Brown: Thanks for that tip. Cross-checks are welcome. We try to give our folks the real skinny here.
Cars & Fuel Consumption: The program could nudge people to conserving fuel... but only if a gas tax ever happens.
Warren Brown: Geez! You think? Yep. Congress, in its poor attempt to imitate the European equivalent of CARS, seems to be blithely unaware of that one essential fact.
Narragansett, Rhode Island: Hi Warren, love your chats and I have learned a lot about cars from them. I own a 2003 Honda Accord with 150K miles. Drives well no problems. I'm thinking of purchasing a car that will do better in city driving since that is what I do the most of now and gas I RI is expensive. Any suggestions including staying with what I have now that is paid for. Thanks.
Warren Brown: Hello, Narragansett (the town whose spelling knocked me out of a Spelling Bee decades ago when I forgot the last darned "t"):
Stay with what you have now. I'm sure that you have other pent-up demands that need taking care of. But if you want a second car, a fun fuel-miser, it's hard to beat the Honda Fit Sport for economy and fun on the road.
Baltimore, Md.: Warren, given that the CARS program may be out of money within a week of implementation, do you believe this was a success for both the car companies and government? And do you think this should be continued?
Warren Brown: Clearly, it was a success for the car companies and their dealers. Apparently, based on the latest news from the Hill, it will be continued. But it will never succeed as a fuel-conservation measure without concomitant laws affecting fuel prices in ways that help to bring consumers to their senses.
Really, let's think about this:
As has been proved, we rush out to buy when the government is "giving" us rebates of up to $4,500--a "gift" from the U.S. Treasury, a.k.a., taxpayers.
But we whine like children if anyone anywhere suggests that the only way to maximize that CARS investment, in terms of energy conservation, is to raise federal fuel taxes. Who do we think we're fooling?
Washington, D.C.: Hi Warren, please take my question! I have to get a new car and am looking for a small SUV, hybrid, to get better gas mileage. But as far as I know, NONE of the automakers make such a car. Why is that? Do you have any contacts at Toyota, Honda, Subaru, Ford, etc. that you could ask if something is planned in the near future? It's very frustrating to see that Toyota can offer a prius that gets over 40 mpg but can't make a RAV4 or some such car that gets 30 mpg. The closest car I've seen is the lexus, but that's not really affordable for the average car owner (it's over $50,000). Thanks for asking, I really appreciate it!
Warren Brown: There are several high-mileage compact SUV models including the new Chevrolet Equinox, Ford Escape Hybrid, Toyota Highlander and, I think, one from Nissan. Corrections welcome. But I'm reasonably sure about those. In fact, I plan to drive the new Equinox next week for full review.
Arlington, Va.: The initial funding for CARS was $1 BILLION not $1 million. I saw some dealers on the news last night complaining about all of the paperwork required and how long it takes to complete it.
I almost wish I was in the market for a new car these days with all of the incentives out there, but my 2006 MINI is doing great. And I would probably just replace it with a Clubman anyway and I don't think MINI is doing as much as other makers with incentive deals. What do you know about the new MINI store opening in Alexandria? It will be nice to not have to drive all the way out to Sterling any more.
Warren Brown: Yes, Arlington. My error. that should have read "b" as in billion as opposed to "m" as in million.
And, yes, we have no intention of anytime soon replacing our wonderful 2001 Mini Cooper. For that matter, nor are we getting rid of our 2001 Toyota Echo anytime soon, and it's ugly!
And I'm looking forward to driving to Alexandria as opposed to way out to Sterling.
The CARS program apparently will be extended--an additional $2 billion in funding latest report. Stay tuned. And remember--CARS or no CARS, don't buy more car than you can afford. Keep in mind that Michelle Singletary's Color of Money Rules still apply. I'm learning to live buy them. If it doesn't comfortably fit the budget, it doesn't get bought!
Auto Industry and Gas/Carbon Tax: It seems like the auto bailout and CARS program are both missing a key ingredient... a realistic fuel policy...without a higher price floor on gas -- consumer's will never commit to buying fuel efficient cars and trucks. And without that commitment, car companies will never be able to fully commit to fuel saving technologies. Why doesn't the President just lay this out for the American people -- there is no reason to spend tens of billions of dollars to save GM, Ford, and Chrysler and tell them that they need to make all these new investments in green tech -- if the market is going to ultimately abandon them b/c gas prices drop to $2 a gallon. A real gas tax has to be part of the solution.
Warren Brown: I don't know why the President refuses to just make this plain 'ole common sense truth, which it is. Democrats and Republicans are both dropping the ball on this one. It's silly.
Re: CARS & Fuel Conservation: Warren Brown: Geez! You think? Yep. Congress, in its poor attempt to imitate the European equivalent of CARS, seems to be blithely unaware of that one essential fact.
Sadly, yes. But you never know; reality has to set in sometime!
Warren Brown: Before it's too late, I hope.
Flex or Traverse?: Our family car is currently a Camry. We have two kids and it actually works extremely well for us. But we wanted something bigger so we have enough room when grandma visits. We don't want a van because we don't need that extra passenger space all the time. We're thinking of the flex or traverse and I read your columns on both. We're going to test drive them soon, but is there anything else to consider when picking between the two?
Warren Brown: Yes, also look at the MazdaCX9 and Volvo XC60. And while you're at it, check out the Toyota Venza. If you want to lux it up and get all the utility you want, it's hard to beat the Buick Enclave.
Boca Raton, Fla.: Warren, saw a Ford Flex the other day. I thought Chrysler had a lock on ugly cars, but Ford is definitely in the running. And, the power/weight ratio could be better for such a big vehicle.
Warren Brown: Fair enough, Baton Rouge.I like the Flex, but join you in wishing for a bit more power in that one.
Arlington, Va.: Dear Mr. Brown, well, I just went out and bought a Mini Cooper Clubman. Love the car, but wanted to know if you had any experience driving the car and, if so, your thoughts?
Warren Brown: Yes, Arlington. But I made it a short Clubman test-drive for purely selfish reasons. Mary Anne was falling in love with that one and making potentially costly noises about what "we could afford." Enjoy.
Silver Spring, Md.: This is in response to Williamsberg. I grew-up near Berkeley CA where a guy took a old gas station and turned it into a U-Sale lot for cars. The lot was called "Buggy Bank". I bought and sold many cars off that lot because it was a great way for individuals to sell their cars without streams of people coming to your house. I looked into starting a "Buggy Bank East". The problem is you need a high traffic area and cheap rent to make a go at it. Not many people are willing to rent a space on a lot at $300 per week when the internet is almost free.
Warren Brown: Thanks, Silver Spring, especially for confirming my guess that it was something of a California idea.
Alexandria, Va.: Hi Warren, I was amused by the last paragraph in this mornings article about the cash-for-clunkers program, where local dealers are complaining that sales are so high they are having trouble floating the rebate (since they don't get paid by the feds immediately). Talk about biting the hand that feeds you; would they rather not have the sales and so not have to float the loans?
Also, you've got a typo in the lead-in for this chat: the program has burned through 1 billion, not 1 million.
Warren Brown: Thanks, Alexandria. Yes, folks, that was $1 Billion for CARS, which, now looks like it might go to at least $2 billion for CARS, if not more.
We will continue this conversation on the radio, "on Wheels" with Armstead, Brown, Hammond and Reich 12-noon to 1 PM, WMET World Radio, 1160 AM on the dial, www.wmet1160.com on the Internet. The call-in number is 866-369-1160. Call us.
Thanks to my wonderful producers for today's effort.
Eat lunch, Ria, you hard-working soul!
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