Is this part of the solution for the US auto industry?

The German government has an innovative program to spur the sale of new cars. Do you think that something like this would be a good idea for the US?


I could see it on a small scale as part of a more comprehensive plan. I think the plan has merit on several fronts, helping the car industry, pollution and economy. Regardless, people have to feel their job is secure for the term of any car loan and cars have to be better than what’s offered now. For many now, neither is true.

Personally, I just can’t live with that sort of thing.

  • Disposable society. We’re surrounded by more and more cheap and unnecessary junk everyday. Things are not built to last. We’re accustomed to just throwing them away. Lots of waste - unhealthy frame of mind. Lots of people hang out here because they like to take care of and keep cars for a long time and take pride in how long they can keep them in quality service. I like the basic craft and responsibility mentality that comes with that. I think it is healthy for humans. Once cars are as disposable as something like portable CD players or mobile phones, what is next?

  • What is the point? The US currently has more registered cars on the road than licensed drivers. As such we are in something of a pickle. We don’t actually need to save the auto industry as it currently exists - we have enough cars (oversimplified, I know). But we can’t afford not to save the industry as it exists because too much economic activity depends on it. So we sort of have to keep utilizing capacity just for the sake of capacity utilization. It always reminds me of Mickey Mouse battling the water carrying brooms in the Disney version of the Sorcerer’s Apprentice.

So, in short, if the question is whether or not it might help the industry - maybe. But do we really think that what we end up with is good?

What is the point?

That depends on how the program is handled. If the intent is to increase the fuel efficiency of cars on the road, then just give a tax credit to folks who increase their mileage. It could be a sliding scale. If someone gets 10 MPG more based on EPA estimates, then they get the most. If the car gets the same or worse mileage, they get nothing. Hey, if you pay me $3300 to trade my Buick Regal in on a car that gets 31 MPG on average, I’m in. That’s likely to be a 20% price reduction.

Japan has been doing this for years by requiring the virtual rebuilding of a 10 year old car with a typical average of 70,000 miles on it! The stated reason is safety; the real reasan is stimulationg the domestic market. Many of these cars are sold as virtual scrap to other Asian countries and even Ireland and New Zealand, which drive on the left side of the road.

In Germany there already is a lively export business of 10 year old cars to Africa, Eastern Europe and Latin Amercia. Used Mercedes cars are really sought after in Nigeria, for example.

This latest move speeds up the process; I doubt if these cars are scrapped; they will likly be exported to developing countries.

Aren’t we trying this, on a much smaller scale, right now? As far as I know there is a new car sales tax forgiveness provision (with limitations) built into the stimulus package.

I’m not inclined to replace either of my vehicles right now, but given sufficient financial incentive I might consider it. However, I don’t like the depreciation that’s inherent in the purchase of a new vehicle, and this would remain a major obstacle for me.

The only reason the car-dependent American society can function is because of the supply of cheap relatively reliable used cars. If you start doing things like this, the price of used cars will go up a lot and large portions of society are going to be priced out of owning a car. In countries like Germany and Japan, this isn’t a big deal because there are extensive and efficient public transit systems there; in most of the US there are not and so people are dependent on their cars. What are they going to do when they can’t afford one?

Good point!

I’ve long been against using legislative actions to artificially manipulate marketplaces.

It was legislative maniipulation of the mortgage and financial industries to try to shore up the economy by making loans easy and plentiful that created the mess we’re in now.

And you don’t think that corporate greed played any part in this?
The record of really sleazy dealings at both World Savings and Countrywide Financial (to name just two) would seem to indicate otherwise.

I’ll hop on that as a great point. If it wasn’t for an overflowing used car market I’d probably be on a bicycle.

The largest manipulation of marketplaces is done by large corporations. Since our legal system changed in the 19th century to allow the kind of unlimited in size, duration, and function corporation (limited only in liability) we have not been able to have a “free” market place. It is also, incidentally, the growth of huge corporations that brought us huge government, huge labor unions, etc. It is a mess either way, and mistake to assume that it is legislative intervention alone that makes a mess. Look at it this way - state interventions make a mess so we start blaming the state and pull it back (deregulation) - then deregulation makes a huge mess and we go back to regulation. Ad infinitum. It is a mess no matter which way you go.

Meanwhile, we’re all going nuts about market cycles that are as old as big capitalism. They go with the economic form - not the state.

"And you don’t think that corporate greed played any part in this? "

Of course! And it was “corporate” greed (me, inc.) in Congress that changed laws to allow it to happen. Did our elected representatives know this would happen? No, they can’t see the future. But they should have known that human nature is to take what is legitimately available. I think that Congressfolk and Senators wanted to help marginal buyers get mortgages, but they should have known, or at least their staff should have known and advised them, that it would smack them in the face. And it did. Of course, the other side of the aisle wanted to authorize the sale of subprime mortgages to help their banking buddies. Which dope did you vote for?

Of course it played a part, as did personal irresponsibility and naivete.

But is it the function of our government to use legislation to artificially manipulate the private sector other than to protect the naieve from the predators? Or was the purpose of the revolutionary war to emancipate us from such rule?

Did the Community Reinvestment Act do oethr than to flood the market with nonperforming loans to people who had no hope of paying them off?

Relieving the credit industry of its “tied to prime” cap on interest rates for monies already borrowed, did that protect comsumers from that corporate greed? Legislation protecting the credit rating industry from civil liability for the damage its irresponsibility causes…is that what the founders had in mind?

Naw, IMHO our legislators are largely serving their own interests and the interests of big business rather than the interests of the private citizens.

That’s the me, inc. I was referring to.

We can’t have unfettered capitalism. It didn’t work around the turn of the 20th century, and it won’t work now. That means the government must intervene at some level. How much" That’s where the argument will start and go on forever.

Agreed. It’s the “how much” that worries me.

Yes, the forced early retirement of low mileage cars in Japan is a big source of aero conversion auto engines for the homebuilt aircraft market. The Subaru boxer four is a particularly popular engine for homebuilt aircraft.