Little Fuel Savings in Cash for Clunkers

December 15, 2010

By Zakia Williams and Christian Wright
VCU Multimedia Journalism Masters Program

One goal of Cash for Clunkers, the billion-dollar federal program that offered vouchers for buying new cars, was to boost fuel efficiency: to encourage people to trade in gas guzzlers for vehicles that got better mileage.

By that measure, the program was a bit of a clunker itself: In many of the Cash for Clunkers transactions, people simply traded in one gas guzzler for a vehicle that guzzled only slightly less gas.

Americans bought about 677,000 vehicles with Cash for Clunkers vouchers. On average, the new cars got about 9 miles per gallon more than the vehicles being traded in, according to an analysis of data released in November by the U.S. Department of Transportation.

Vehicles sold by Virginia car dealers did better than the national average: They typically got 9.5 mpg more than the trade-ins. The vehicles purchased in Richmond did worse: They got, on average, only 8.9 mpg more than the trade-ins.

Get this: Under Cash for Clunkers, nobody traded in a Hummer — the poster child for gas guzzlers. But 15 people actually bought Hummers under the program. (Hummers get 16 mpg. The buyers traded in old trucks that got 11-15 mpg.) 

The architects of Cash for Clunkers were probably hoping that people would trade in, say, a 1996 Ford Explorer sport utility vehicle, which got 15 mpg, for a 2010 Toyota Prius, which gets 50 mpg. And indeed, 10 Virginians made that very fuel-efficient swap.

But many of the transactions did relatively little to save on gas.

For instance, 10 Virginians traded in 1994 Ford F150 pickup trucks, which got 15 mpg, for 2009 Ford F150 pickups that get only 16 mpg.

And six Virginians traded in 2000 Ford Windstar Wagons, which got 17 mpg, for 2009 Hyundai Santa Fe SUVs, which get 20 mpg.

Even when they downsized, Virginians did not always net a lot in fuel efficiency: Eight Virginians swapped 1997 Jeep Grand Cherokees, which got 15 mpg, for 2009 Honda CR-V crossover SUVs, which get 22 mpg.

In a quarter of all the Cash for Clunkers transactions, the new vehicles got, at best, only 5 mpg more than the trade-ins.

Such statistics raise questions about a key goal for Cash for Clunkers. In promoting the program, the Obama administration touted that trading in old cars for new ones would not only boost the economy but benefit the environment.

According to the website for Cash for Clunkers, buying a fuel-efficient vehicle could save reduce greenhouse emissions, improve energy security and reduce U.S. dependency on foreign oil.

Nationwide, the average transaction involved trading in a vehicle that got 16 mpg for one that gets 25 mpg. That pattern held true for Virginia and for Richmond.

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A car’s fuel efficiency is only one factor in how much gas it uses. Another factor is how many miles the vehicle is driven.

The new vehicles purchased under Cash for Clunkers may be driven more than the trade-ins — and if so, they’ll use more gasoline.

“These old vehicles weren’t used a lot. And now these people have newer cars, and newer cars will be driven more,” said George Hoffer, a professor emeritus of economics at Virginia Commonwealth University who now teaches at the University of Richmond.

Hoffer said he believed that many people who participated in Cash for Clunkers traded in third vehicles that weren’t often used.

“The people in position to take advantage of this drove clunkers by choice, not by necessity,” Hoffer said.

Robert Cone, principal and owner of Managed Care Innovations in Richmond, is one of those people. Cone drove a 1991 Ford Explorer (16 mpg) until Cash for Clunkers, when he traded it for a 2009 Ford Flex (19 mpg).

“I had an old Ford Explorer,” Cone said. “It was a fine automobile — nothing wrong with it at all. And then the government came along and decided they wanted to give me $4,000 to purchase a new car.”

Hoffer believes most Cash for Clunkers participants were frugal upper-middle-class Americans age 55-70.

“These were people who drove early-model clunkers, where they let their kids take them to college,” Hoffer said. “The vehicle had no value, yet they kept them as third vehicles.”

According to critics, another problem with Cash to Clunkers is what happened to the trade-in vehicles: They could not be resold by the dealerships, under the rules set by the National Highway Traffic Safety Administration. Instead, the old cars went to junkyards to be crushed or shredded.

Cone said that was a waste.

“We just threw away of what I consider to be a very valuable resource,” he said.

“Can you imagine the number of people in this country that today don’t have reliable transportation — which means that if they do have jobs, they have a hard time getting to work.”

Not even the junkyards benefited: After the trade-in cars had been disabled, they often were worthless.

“We did not have a boom in business because of Cash for Clunkers,” said Brad Matthews, owner of Oakhill Used Auto & Truck Parts.

He said most of the Cash for Clunkers trade-ins were crushed.

“We salvaged parts from some of the cars, but we crushed the rest,” Matthews said.

Hoffer said the trade-ins would have made serviceable vehicles for people who couldn’t afford a new car.

“These vehicles that were destroyed were also in perfectly good shape,” Hoffer said.


How CARS Worked

The Cars Allowance Rebate System (informally known as Cash for Clunkers) was an initiative spearheaded by the Obama administration in 2009 to stimulate the economy and help the environment.

At the time, the major American car companies were facing lagging sales — and General Motors was facing bankruptcy.

Cash for Clunkers began on July 1, 2009, and ended about two months later — on Aug. 24 — when the federal money allocated for the program ran out.

Consumers could qualify for a $3,500 voucher or a $4,500 voucher.

To qualify for the $3,500 voucher, your new car had to:

  • Be at least 4 mpg better than your old car if it was a compact car
  • Be at least 2 mpg better than your old if it was an SUV or light truck
  • Be at least 1 mpg better than your old if it was a van or a pickup truck
  • Be a work truck only if your trade-in was a work truck

To qualify for the $4,500 voucher, your new car had to:

  • Be at least 10 mpg better than your old car if it was a compact car
  • Be at least 5 mpg better than your old car if it was an SUV or light truck
  • Be at least 2 mpg better than your old car if it was a van or a pickup truck

Cash for Clunkers: By the Numbers

Nationwide, 676,984 transactions qualified for the Cash for Clunkers program.

California had the most trade-ins — 76,479.

The Northern Mariana Islands, a U.S. territory, had the fewest — seven. (The state with that distinction was Wyoming, with 591 transactions.)

The most traded-in car was the 1998 Ford Explorer with four-wheel drive. The 15-mpg SUV was jettisoned by 4,559 people.

The second most traded-in car was the 1996 Ford Explorer, which also got 15 mpg. This model was traded in by 4,092 people.

In Virginia, 23,562 people participated. The most popular trade-in was the 1996 Ford Explorer with four-wheel drive.

Nationwide, the trade-ins included six Maseratis, 11 Porches, 1,010 Jaguars, 1,136 Audis, 3,456 BMWs, 4,447 Lexuses and 5,217 Mercedes-Benzes. The more unusual new vehicles purchased under the Cash for Clunkers program included 15 Hummers, 20 Infinitis, 44 Cadillacs, 157 Mercedes-Benzes, 606 Lincolns and 766 BMWs.  


About the Data

The entire Cash for Clunkers database is available at www.cars.gov. We used Microsoft Access and Microsoft Excel to organize, summarize and analyze the data.

Here is a spreadsheet with summary statistics on the program — state by state, nationwide and for Virginia.

State
Transactions
Average mpg
for trade-ins
Average mpg
for new vehicles
Gain in fuel
efficiency (mpg)
ALABAMA
7,377
15.8
24.2
8.5
ALASKA
1,142
15.1
23.1
8.0
ARIZONA
9,133
15.8
25.5
9.8
ARKANSAS
5,469
15.4
23.8
8.4
CALIFORNIA
76,479
16.1
26.5
10.4
COLORADO
8,525
15.5
25.2
9.8
CONNECTICUT
9,164
15.8
25.3
9.4
DELAWARE
2,661
15.7
24.3
8.6
DISTRICT OF COLUMBIA
17
16.3
25.6
9.3
FLORIDA
34,246
16.1
25.3
9.2
GEORGIA
16,599
15.9
24.7
8.8
GUAM
153
16.2
25.0
8.7
HAWAII
1,712
16.2
25.1
8.9
IDAHO
2,743
15.4
24.4
9.1
ILLINOIS
33,945
15.9
24.7
8.8
INDIANA
15,492
15.7
24.6
8.9
IOWA
8,868
15.5
24.3
8.8
KANSAS
7,403
15.5
24.2
8.7
KENTUCKY
8,897
15.7
24.5
8.8
LOUISIANA
7,878
15.7
23.7
7.9
MAINE
3,886
15.6
24.6
9.1
MARYLAND
17,658
15.9
25.2
9.4
MASSACHUSETTS
15,144
15.9
25.2
9.3
MICHIGAN
31,193
15.7
23.8
8.2
MINNESOTA
17,075
15.6
24.9
9.3
MISSISSIPPI
2,927
15.6
23.9
8.2
MISSOURI
14,408
15.6
24.4
8.8
MONTANA
1,470
15.2
24.6
9.5
NEBRASKA
5,134
15.3
23.6
8.3
NEVADA
3,351
15.6
25.3
9.6
NEW HAMPSHIRE
5,372
15.6
24.7
9.0
NEW JERSEY
24,529
15.9
24.9
8.9
NEW MEXICO
3,224
15.5
24.7
9.3
NEW YORK
36,764
15.9
24.8
8.9
NORTH CAROLINA
18,417
15.8
25.0
9.2
NORTH DAKOTA
2,103
15.3
23.8
8.5
NORTHERN MARIANA ISLANDS
7
16.9
26.7
9.9
OHIO
32,117
15.9
24.9
9.0
OKLAHOMA
8,723
15.5
24.2
8.7
OREGON
8,818
15.7
25.6
9.9
PENNSYLVANIA
32,865
15.7
24.6
8.8
PUERTO RICO
505
16.3
25.3
9.0
RHODE ISLAND
2,514
15.8
25.2
9.3
SOUTH CAROLINA
8,807
15.9
24.7
8.8
SOUTH DAKOTA
2,437
15.1
23.5
8.3
TENNESSEE
11,930
15.8
24.9
9.1
TEXAS
42,939
15.7
24.5
8.8
UTAH
5,602
15.4
25.3
9.9
VERMONT
2,322
15.5
24.5
9.1
VIRGIN ISLANDS
13
15.5
22.4
6.9
VIRGINIA
23,562
15.9
25.3
9.5
WASHINGTON
13,068
15.8
25.5
9.7
WEST VIRGINIA
3,155
15.5
24.6
9.1
WISCONSIN
16,451
15.6
24.5
8.8
WYOMING
591
15.1
23.4
8.3
Nationwide
676,984
15.8
24.9
9.1