WASHINGTON (Jan. 9, 2009) — The Tire Industry Association (TIA) and five other automotive aftermarket trade associations have joined the Specialty Equipment Market Association (SEMA) in opposing a “Cash for Clunkers” program being considered as part of the federal economic stimulus plan.
Cash for Clunkers is the industry's term for a plan to use taxpayer dollars to purchase older, ostensibly heavier-polluting vehicles to get them off the road and serve as a catalyst to new car sales.
On the contrary, the groups state in a joint letter to Congress, there is no evidence that the program will achieve the stated goal of boosting new car sales, reducing emissions or fuel consumption, and instead could end up hurting lower income car owners and automotive aftermarket companies.
“These programs have been generally rejected by the states since they are not a cost-effective means to improve fuel mileage, reduce emissions, or spur to new car sales,” the seven groups said in the letter. “Conversely, Cash for Clunkers programs threaten jobs in the automotive aftermarket since they remove the opportunity to repair and upgrade existing cars and raise the price of used cars and parts.”
Alternatively, the associations are pledging support for legislation to provide tax incentives to purchase new cars such as allowing deductions for interest on car loans and state sales tax. The groups also support tax credits to help upgrade, repair or maintain an older vehicle.
“A number of commercially available products and technologies exist that will substantially lower the emission rates of older vehicles while also offering the owner added performance, drivability and fuel mileage,” they state in their letter. “These innovative solutions drive product sales, produce American jobs and secure tax revenues for the government all while sustaining the multi-billion dollar motor vehicle aftermarket.”
In addition to TIA and SEMA, the associations that signed the letter are: Automotive Aftermarket Industry Association (AAIA); Automotive Engine Rebuilders Association (AERA); Automotive Parts Remanufacturers Association (APRA); Automotive Warehouse Distributors Association (AWDA); and Automotive Transmission Rebuilders Association (ATRA).
These groups represent a segment of the economy they peg at being worth $258 billion in annual sales revenue and providing jobs for about 4.5 million citizens. Among the businesses affected would be those that make, rebuild, restore, customize, distribute, retail and install vehicle parts and perform service on all types of motor vehicles, including the older vehicles this legislation targets, SEMA said.
The cash for clunkers idea first got legs in July last year when it was proposed by Alan Blinder, a professor of economics and public affairs at Princeton University and former vice chairman of the Federal Reserve, in an op-ed piece in the New York Times.
The idea is supported by the Center for American Progress Action Fund, a progressive think-tank “dedicated to improving the lives of Americans through ideas and action.” It is headed by John Podesta, a professor at Georgetown University Center of Law and former chief of staff to President Clinton.
Among the objections the aftermarket groups raise are:
* Clunker programs focus on a vehicle's age rather than a vehicle's emissions, based on the perception that all older cars are dirty cars. However, the groups point out, no actual emissions measurements are taken for cars that are scrapped.
* Clunker programs rarely capture the “gross polluter,” an improperly maintained vehicle of any model year, which puts out dramatically more emissions due to poor maintenance.
* Clunker programs diminish the availability of affordable transportation and repair parts to lower-income drivers as more and older cars are crushed. Most lower-income individuals will not be able to afford to buy new vehicles, let alone more fuel-efficient or cleaner vehicles, with the money provided by clunker programs.
* Clunker programs compete with charitable organizations such as Melwood Industries, the Congressionally chartered Military Order of the Purple Heart and the Salvation Army that rely on used car donation programs to fund their programs.
* Auto restoration, customization and repair shops nationwide will suffer with the loss of older cars, trucks and parts they need to supply and service their customers. It will also reduce and supply and therefore raise and price of second- and third-hand cars and trucks often purchased by lower-income citizens.
* Cash for Clunkers programs risk destroying classic, historic and special interest vehicles. America safeguards its artistic and architectural heritage against indiscriminate destruction.
* Clunker programs do not guarantee that a scrapped vehicle will be replaced with a more fuel-efficient vehicle. In fact, many older vehicles get better fuel mileage than the newer models.
* Cars turned in for scrappage often are rarely driven second or third vehicles that have a minimal impact on overall fuel economy or emissions.
* There is no evidence that clunker programs boosts demand for new vehicles, drives traffic to new car dealerships or creates or retains jobs.