Bloomberg Anywhere Remote Login Bloomberg Terminal Demo Request


Connecting decision makers to a dynamic network of information, people and ideas, Bloomberg quickly and accurately delivers business and financial information, news and insight around the world.


Financial Products

Enterprise Products


Customer Support

  • Americas

    +1 212 318 2000

  • Europe, Middle East, & Africa

    +44 20 7330 7500

  • Asia Pacific

    +65 6212 1000


Industry Products

Media Services

Follow Us

Bloomberg Customers

Incredible Deals Possible With Clunkers Bill

Posted by: David Kiley on April 1, 2009


One proposed Clunker bill, introduced by Rep. Betty Sutton (D-OH) would result in some sensational deals on new cars if some version of the bill gets passed in Congress.

This is a bill that would use tax-payer dollars to add to new-car incentives. The idea is to give people money to buy new cars, stimulate the economy and get older cars with poor emissions performance off the road. gave me MSRPs and current incentives on five vehicles that would easily qualify for the federal incentives under the Sutton bill; though I caution that there is committee work being done on the bills in Congress that may not come out as generous as Sutton’s. This is back-of-the-envelope. But it’s pretty close. And it assumes that the car companies would keep up their levels of incentives, though some may be backed off if the government steps in.

The Chevy Malibu: MSRP is $25,510. GM already has incentives taking it down to $20,510. The four cylinder Malibu would qualify for a $5,000 added incentive, while the six-cylinder would qualify for a $4,000 rebate. Take an additional $300 off for the sales tax credit. Final price: $14,700 for a Malibu.

Ford Focus: MSRP is $18,466. Ford’s incentives take it down to $15,200. The Focus would qualify for a $5,000 federal rebate. Sales tax savings would be around $225.00. Final price: about $10,000.

Honda Civic: MSRP is $20,589. Honda’s incentives take it down to $18,417. Add the Federal rebate of $5,000 and the tax credit worth about $275. Final price: About $13,000.

Dodge Ram: The Sutton bill calls for commercial trucks to be bought as long as a nine-year-old or older truck is scrapped. No fuel economy provision for businesses. MSRP on the RAM 1500 Edmunds cites is $39,010. Chrysler’s incentives already take it down to $27,973. The federal rebate would be $5,000, and the tax credit is worth about $400. Final price: $22,500 for a pretty loaded truck.

Toyota Camry: MSRP is $25,037. Toyota already discounts it to $21,338. Add a $5,000 federal rebate for the four-cylinder, or $4,000 for the six cylinder. Tax credit savings is about $300. Final price: About $16,000 for the four cylinder Camry.

The Sutton bill, like others, is structured to get people out of older cars with poorer emissions and fuel economy performance, and into a new, greener car that will stimulate the economy.

Getting out of, say, a 1995 Explorer and into a Malibu, Ford Fusion or even a Focus, is not far fetched. Ford, for example, says the trend has already begun of baby boomers who bought minivans and SUVs in their child rearing ages trading them in for cars. That trend is only going to continue.

Think of young drivers who inherited some of these SUVs and Oldsmobiles from their parents and grandparents. If the clunker bill passes, it’s hard to imagine getting this much vehicle for such a low price again after the money for the bill runs out.

The only alteration to the above numbers I’d make is that you would need to add to your total cost the cost of financing ( if you couldn’t get zero-percent) and the value of your trade in. As the car will be scrapped, there is no trade in value.

So, some people may take themselves out of the process. My 2000 Subaru Legacy, for example, is worth about $4,000 if I sell it. I lose that if I treat as a clunker. But the person who has, or can scare up a 1993 Explorer with 200,000 miles on it or a 1993 Olds Cutlass Ciera with 180,000 miles on it is in a lot better shape. Or take my friend Darlene who has a 1988 Jeep Cherokee whose engine parts are deteriorating from the ethanol levels in today’s gasoline. Her car is worth zip, except to her.

Given the fact that the auto industry is selling at a rate of 9.7 million a year, and the “real” demand is more like 13.5 million but for the Recession, it’s hard to believe that deals like these wouldn’t drag a million additional buyers off the sidelines.

(Follow me on Twitter: @davidkiley)

Reader Comments

Paul (Vw)

April 1, 2009 8:47 PM

>>> it’s hard to believe that deals like these wouldn’t drag a million additional buyers off the sidelines.

It's also hard to believe the economy imploded so badly.

First we're told that people aren't buying new cars because they are afraid of automaker bankruptcy. Now Mr. Obama comes out and says the government will backup GM/Chryslter warrantiess. I doubt that will make a difference (we'll have to see).

I suspect there is a reason people like Darlene are driving around in a 21 year old vehicle (no disrespect intended)...and with the economy as bad as it is, I suspect that even with a discount a new vehicle's cost is at least as prohibitive if not more so now.


April 1, 2009 10:54 PM

So, ALL these people driving 1995 vehicles(with NO car payments)Are going to Pony up for 5 years of $190-350/month car payments. Alot of these people are already having trouble making their mortgage/ credit card payments. And the solution here is more payments???? ALL I see is a FLOOD of Car Loan defaults in the next 12-30 months!!


April 2, 2009 10:39 AM

I just want to know when Canada will follow the US. They do all the things US does to get money out of our pockets but when its time to help us save.. this blood sucking Canadian taxation Government will only give $300 back for a clunker.

Miguel Cabrera

April 2, 2009 5:01 PM

I need advise. I have a 2003 Volkswagen Golf parked on a friends garage waiting for someone to pay $8000 for it. It's in mint condition but so far, nobody has contacted me. I was looking at the option to have it shipped to Madrid, where I now live permanently. What should I do??? Am I going to sell it? I need a car in Spain.


April 3, 2009 3:32 PM

Another giant leap toward socialism


April 7, 2009 4:49 AM

Hi all... I am new to baynet too.Of course, I quit reading and posting on the some blogs & forums. I won't go into details becuase I am sure most of you know why...
it will take a little time to get use to this interface, but I think I can manage..

Car Loans


April 29, 2009 3:40 PM

A. Socialism = government control of all industry
B. Fascism = Industry control of the government
C. Feudalism = Capitalism minus the middle class (supply side economics?)
D. Goverment provision for the common welfare is American democracy.
We're closer to B and C.
Read the constitution. Get a clue.


May 19, 2009 5:39 PM

my 92 Corvette (40,000 real miles) for a 2010 Camaro RS ... done deal ...


June 1, 2009 8:43 PM

This will also destroy the resale/trade-in value of the cars that are not junked. More problems for those who would have otherwise turned in their cars for $4-7k. Government introduced distortions are really bad - they just make arbitrary winners/losers - if you maintained your car well, you lose. If you have a car that's not worth much because you didn't maintain well, guess what, you win!


June 4, 2009 12:13 PM

Great analysis. I own a 1995 Explorer and would certainly trade for a Malibu at that price evean though my explorer with 175,000 miles is in great shape with everything working. I also own a Pilot and BMW but I guess there aren't any restrictions as to the clunker being your only car. Could you sell the cluncker to someone for $4K and they in turn qualify for the rebate?


June 10, 2009 10:15 AM

I have a 1994 Chevy CK3500 that gets 10 mpg but is paid for and has only 78,000 miles on it. Looks like hell but it runs great, why would I want another car payment when the extra gas does not add more than a few hundred dollars a year to the cost of operation? Fortunately for Obama, most people in this country don't or can't use their heads...Dah! This was proven by his election.


June 10, 2009 3:43 PM

So the idea is to get rid of many good running vehicles in order to support new car sales? Has the whole country gone mad? Oh yeah, they voted for this nut-case Obama. Sad times. People are so out of it!! When people finally see what we have going on here it will be too late to undo his damage. It's all backward. Damn you who voted for him!

Post a comment



Want the straight scoop on the auto industry? Our man in Detroit David Welch, brings keen observations and provocative perspective on the auto business.

BW Mall - Sponsored Links

Buy a link now!