Tuesday, 31 March 2009 10:33
Scrappage Plan Must Include International Nameplates
The environmental movement and the auto industry normally go together like peanut butter and pickles - which is to say, not well. So when an opportunity comes along to benefit both groups, shouldn't we jump on it?
The answer is yes. And no.
In this case, I'm talking about Rep. Betty Sutton's (D-Ohio) CARS act, introduced on March 17, which would provide consumers up to $5,000 for trading in their old clunkers for new, more fuel efficient rides. Sounds good, so far. AIADA enthusiastically supports any point-of-sale solution that builds consumer confidence and gives Americans a reason to visit a dealership.
Unfortunately, Rep Sutton didn't stop there. Her bill also contains a requirement that the new cars be built in the United States and get at least 30 mpg to qualify for the full $5,000. If a car gets 27 mpg and is built in the U.S. its buyers will receive $4,000. Buyers can also receive $4,000 if they buy a car averaging 30 mpg built elsewhere in North America. Interested in a fuel efficient vehicle built outside North America - like the 2010 Toyota Prius, which gets a whopping 50 mpg? Too bad, no voucher for you.
On Monday, President Obama gave a speech to the nation outlining his restructuring plan for the American auto industry. Portions of his remarks were of particular interest to AIADA, as they addressed the dealer financing crisis. Obama also expressed support for a scrappage bill. I sincerely hope that he was speaking of a version of the cash for clunkers plan that applies to all vehicles retailed in the U.S. and contains none of Rep. Sutton's protectionist point-of-origin constraints. We need a plan that will benefit the entire auto industry, the environment, and all American dealers.
In Germany a cash for clunkers plan has resulted in a significant bump in sales - 20 percent in February. That plan is working thanks to its straightforward construction and direct benefit to the consumer.
Picking and choosing marketplace winners and losers may have become commonplace in the past year or so, but it still rubs me the wrong way. The government is in no position to tell consumers what cars they should drive. Americans are perfectly capable of making informed decisions, and should be trusted to do so.
Similar ‘Buy American' legislation was withdrawn from January's stimulus package, in part because it violated international trade agreements, but also because cooler heads in Washington were able to make the case that such legislation will only hurt us. Other countries, upon seeing their goods sidelined, would pass their own protectionist laws, starting us down a spiral of isolationism and economic disaster.
So sure, if just this once we can mix pickles and peanut butter, let's do it. But let's be smart about it. Cash for clunkers makes the most sense when it is applied to all vehicle brands sold in the United States.
Russ Darrow, AIADA Chairman
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