OCTOBER 17, 2009.Cash for Clubbers
Congress's fabulous golf cart stimulus.

We thought cash for clunkers was the ultimate waste of taxpayer money, but as usual we were too optimistic. Thanks to the federal tax credit to buy high-mileage cars that was part of President Obama's stimulus plan, Uncle Sam is now paying Americans to buy that great necessity of modern life, the golf cart.

The federal credit provides from $4,200 to $5,500 for the purchase of an electric vehicle, and when it is combined with similar incentive plans in many states the tax credits can pay for nearly the entire cost of a golf cart. Even in states that don't have their own tax rebate plans, the federal credit is generous enough to pay for half or even two-thirds of the average sticker price of a cart, which is typically in the range of $8,000 to $10,000. "The purchase of some models could be absolutely free," Roger Gaddis of Ada Electric Cars in Oklahoma said earlier this year. "Is that about the coolest thing you've ever heard?"

The golf-cart boom has followed an IRS ruling that golf carts qualify for the electric-car credit as long as they are also road worthy. These qualifying golf carts are essentially the same as normal golf carts save for adding some safety features, such as side and rearview mirrors and three-point seat belts. They typically can go 15 to 25 miles per hour.

In South Carolina, sales of these carts have been soaring as dealerships alert customers to Uncle Sam's giveaway. "The Golf Cart Man" in the Villages of Lady Lake, Florida is running a banner online ad that declares: "GET A FREE GOLF CART. Or make $2,000 doing absolutely nothing!"

Golf Cart Man is referring to his offer in which you can buy the cart for $8,000, get a $5,300 tax credit off your 2009 income tax, lease it back for $100 a month for 27 months, at which point Golf Cart Man will buy back the cart for $2,000. "This means you own a free Golf Cart or made $2,000 cash doing absolutely nothing!!!" You can't blame a guy for exploiting loopholes that Congress offers.

The IRS has also ruled that there's no limit to how many electric cars an individual can buy, so some enterprising profiteers are stocking up on multiple carts while the federal credit lasts, in order to resell them at a profit later. We should note that some states, such as Oklahoma, have caught on to the giveaway and are debating whether to cancel or limit their state credits. But in Congress they're still on the driving range.

This golf-cart fiasco perfectly illustrates tax policy in the age of Obama, when politicians dole out credits and loopholes for everything from plug-in cars to fuel efficient appliances, home insulation and vitamins. Democrats then insist that to pay for these absurdities they have no choice but to raise tax rates on other things—like work and investment—that aren't politically in vogue.

Cash for Clunkers cost $24,000 per car
Edmunds.com says only 125,000 vehicle sales were a result of the government's program.

The U.S. government is calling its Cash for Clunkers program a big success, with nearly 690,000 vehicles sold in July and August. But a report by automotive Web site Edmunds.com says the program actually cost taxpayers $24,000 per car sold.

Only 125,000, or 18%, of the sales were incremental, according to Edmunds.com -- the remaining 82% of sales would have happened regardless of the program.

The $24,000 is the price for the sales of vehicles that were a direct result of the program, Edmunds.com said.

The clunkers program gave car buyers rebates of up to $4,500 if they traded in less-fuel-efficient vehicles for new vehicles that met certain fuel-economy requirements. The government set aside $3 billion for those rebates.

Edmunds.com looked at the sales trend for luxury vehicles and other models not included in program, and it applied the historic sales volumes of those vehicles and those in the program and estimated what the sales figures would have been without the program. The analysts then divided the $3 billion by their 125,000-vehicle number to get an average of $24,000 per vehicle.

The average transaction price for a new vehicle in August was only $26,915, minus an average cash rebate of $1,667.

"This analysis is valuable for two reasons," Edmunds.com CEO Jeremy Anwyl said in a press release. "First, it can form the basis for a complete assessment of the program's impact and costs. Second -- and more important -- it can help us to understand the true state of auto sales and the economy. For example, October sales are up, but without Cash for Clunkers, sales would have been even better. This suggests that the industry's recovery is gaining momentum."

The government was not pleased with Edmunds.com's analysis.

"It is unfortunate that Edmunds.com has had nothing but negative things to say about a wildly successful program that sold nearly 250,000 cars in its first four days alone," Bill Adams, spokesman for the Department of Transportation, told CNNMoney.com. "There can be no doubt that (the clunkers program) drummed up more business for car dealers at a time when they needed help the most."

The economy grew at a 3.5% pace in the third quarter, thanks to a jump in auto sales as a result of the clunkers program. Auto sales contributed 1.7 percentage points to the GDP, the government said in a report this morning.

Clunker deals: old Ford pickups for new ones
AP: Gas mileage only slightly better for many of the purchased vehicles

The most common deals under the government's $3 billion Cash for Clunkers program, aimed at putting more fuel-efficient cars on the road, replaced old Ford or Chevrolet pickups with new ones that got only marginally better gas mileage, according to an analysis of new federal data by The Associated Press.

The single most common swap — which occurred more than 8,200 times — involved Ford F150 pickup owners who took advantage of a government rebate to trade their old trucks for new Ford F150s. They were 17 times more likely to buy a new F150 than, say, a Toyota Prius. The fuel economy for the new trucks ranged from 15 mpg to 17 mpg based on engine size and other factors, an improvement of just 1 mpg to 3 mpg over the clunkers.

Owners of thousands more large old Chevrolet and Dodge pickups bought new Silverado and Ram trucks, also with only barely improved mileage in the middle teens, according to AP's analysis of sales of $15.2 billion worth of vehicles at nearly 19,000 car dealerships in every state. Those deals helped the Ford F150 and Chevy Silverado — along with Ford's Escape midsize SUV — climb into the Top 10 most-popular vehicles purchased with the government rebates. The most common truck-for-truck and truck-for-SUV deals totaled at least $911 million.

In scores of deals, the government reported spending a total of $562,500 in rebates for new cars and trucks that got worse or the same mileage as the trade-ins — in apparent violation of the program's requirements. The government said it is investigating those reports and said in some cases they were probably entered incorrectly by dealers or based on outdated fuel economy figures.

The National Highway Traffic Safety Administration is still reviewing the reports, and any dealers that submitted invalid trade-ins will be directed to return the government rebate, spokesman Eric Bolton said Wednesday.

The new data, obtained by the AP under the Freedom of Information Act, include details of 677,081 clunker trade-ins processed by the government through Oct. 16. More than 95,000 of the new vehicles purchased under the program — or about one in seven — got less than 20 mpg, according to the data.

The new figures, requested four months ago by the AP, represent the first substantial outside accounting of the clunkers program, lauded by the White House and the Transportation Department for improving fuel economy, stimulating sales and taking the dirtiest vehicles off the road. The data show the average fuel economy was 15.8 mpg for the old vehicles and 24.9 for the new ones. But plenty of consumers bought relatively low-mileage trucks and SUVs with the help of government checks.

"If we're looking for the environmental story here, we're going to be disappointed," said Jeremy Anwyl, chief executive at Edmunds.com, an analyst firm. "It might have started out from the perspective of improving the environment, but it got detoured as a way to stimulate the economy."

Popular high-mileage commuter cars including the Toyota Corolla, Honda Civic, Toyota Camry and Ford Focus also were among the Top 10 most popular new vehicles bought under the four-week program, with 105,280 of those models sold for a total of about $2 billion.

Bolton, the NHTSA spokesman, said Wednesday the program "proved to be a win for the economy and the environment" because it helped financially struggling dealerships and auto manufacturers and because, under the program's rules, clunkers necessarily were replaced with vehicles that got better mileage.

Chris Moss of Smithtown, N.Y., traded in his 1992 white Ford F150 pickup — "it had 5 million miles on it and needed $50,000 in repairs, if you know what I mean" — for a new Chevrolet Malibu hybrid for his wife. When he drove his old truck to the dealership's back lot with the rest of the clunkers, "90 percent of what you saw were old 150s and Explorers," he said. Moss posted a video on YouTube of his old truck's final day, called "Rust In Peace."

The $3 billion program, known officially as the Car Allowance Rebate System, ran from July 27 to Aug. 25 and generally required that new vehicles get better mileage — at least 22 mpg for cars and either 15 mpg or 18 mpg for trucks depending on class — and that trade-ins get no more than 18 mpg.

The trade-ins were required to be destroyed in exchange for either $3,500 or $4,500 rebates.

"The value that the customer got for a lot of these vehicles was just a gift, no question," said Scott Pundt, sales vice president for the Dorschel Group of Rochester, N.Y., the No. 4 dealership in the U.S. with 592 vehicles sold under the program. "We were appraising 220,000-mile vehicles that were really rough, and they were getting $3,500 or $4,500 for them."

Four out of five old cars turned in there exceeded 100,000 miles.

Some deals raise eyebrows:

In at least 145 cases, mostly involving trucks, the government reported consumers traded old vehicles that got better than or the same mileage as the new vehicle they purchased. The government said it was continuing to investigate. A driver in Negaunee, Mich., traded a 1987 Suburban that got 18 mpg for $3,500 toward a new Silverado pickup that got only 15 mpg. An Indianapolis driver traded a 1985 Mercedes 190 that got 27 mpg for $3,500 toward a new Volkswagen Rabbit that got only 24 mpg. "It's possible some quirky deal slipped through the cracks," Anwyl said.
In at least 15 deals in nine states, owners of large pickups cashed in old trucks for between $3,500 and $4,500 toward new Hummer H3 SUVs that got only 16 mpg.
A driver in Arlington, Va., traded a 1999 Ford Explorer with 15 mpg in July for $3,500 toward a new $28,000 Jeep Commander that weighs about 4,700 pounds and gets 16 mpg.
In at least 32 deals, drivers traded older vehicles for new large trucks — including versions of Toyota Tundras, GMC Sierras, Chevrolet Silverados, Dodge Rams and Ford F150 pickups — that got only 14 mpg.
A driver in West, Texas, earned $4,500 in July in exchange for a 1989 Chevrolet Suburban SUV that got 14 mpg and bought a 2009 Suburban that weighed 5,900 pounds and got 16 mpg. Across Texas, seven of the 10 most common transactions involved drivers trading old pickups for new ones.
Car-crazy California led clunker sales with more than 76,000 trade-ins, followed by Texas with roughly 43,000 and New York with nearly 37,000. In California, the Honda Civic was the No. 1 new car and no pickups ranked higher than 18th. In New York, the Hyundai Elantra was No. 1.

The clunkers program was very good for Longo Toyota of El Monte, Calif., just east of Los Angeles, which sold more than twice as many vehicles under the program as any other dealership in the country, worth more than $30 million. That sole dealership was responsible for 1,432 sales worth nearly $6 million in clunkers rebates, mostly from its sales of 323 Toyota Camrys, 277 Corollas and 171 Priuses.

"We knew it was just a matter of when, not if, we were going to get paid, so we kept our foot on the gas," Longo president Tom Rudnai said Wednesday.

The next-best dealership was Price-Simms Inc. of Sunnyvale, Calif., with 672 sales of vehicles worth about $16.1 million, mostly from its sales of 213 Priuses and 134 Camrys.

Pundt said his dealership in Rochester advertised aggressively to consumers and operated three shifts of employees to submit claims. "We had people in here through the middle of the night, working 2 a.m. until 7 a.m.," he said. "The computer was so slow."

CT&T City2
South Korean company CT&T has been producing short-trip or "neighborhood" electric vehicles for a while now, and has even committed to producing the things here in the States. Its latest model is the City2, which was on display in a variety of trims and colors. The wackiest one had to be the version geared toward law enforcement — apparently headed to a mall parking lot near you. Technically, it's a "low-speed" EV, but the City2 looks a lot like a glorified golf cart to us. It can reach speeds of up to 35 mph and has a range of up to 68 miles with a lithium-polymer battery, though. So it's a fast and furious golf cart, we guess. The question remains: Is the City2 more or less intimidating than a Segway?