Before President Barack Obamas speech today, I might have been able to sell my winter car, a front-wheel drive 1990 Rover Sterling hatchback, for around $1,500. Now, suddenly, it might be worth as much $5,000.
This morning, the president said he will work with Congress to offer incentives to consumers who turn in old cars to buy cleaner, more fuel efficient new automobiles.
If the presidents desire for an auto scrappage bill becomes law, old cars like my Rover could be a gold mine -- not just for me, but for sleazy used car dealers, curbstoners and others who would game the system for profit.
There needs to be sensible set of restrictions placed on the old cars that are turned in for new ones.
On Craigslist in every city, there are ads for hundreds of cheap cars in such deplorable condition, they arent roadworthy. Any scrappage law should have sharp teeth to prevent cars like this from ending up as a trade-in for a new car.
If not, I can see a cottage industry springing up that would work like this: Im in the market for a new car, but my old one doesnt qualify for the scrappage credit. Or the car is worth more for me to sell it outright.
So I find a dilapidated old bomber on Craigslist, eBay Motors, or in the local classifieds that I would buy for less than the scrappage credit. And then use that for the trade and the $5,000 government credit. You can bet old gas-guzzlers would shoot up in value and be hoarded by those looking to make a quick buck.
It only makes sense. If I could buy a 1988 Chevrolet Caprice that barely runs for $200 and quickly flip it to someone looking to use it for a scrappage trade worth as much as $5,000, I could sell it for a hefty profit.
Details of the scrappage law are still being worked out. But it appears as if one of the requirements will be that an old car must be traded in for a new one that gets better fuel economy and emits less pollution.
Thats a good start. But more restrictions are needed. For instance, for a car to qualify for the scrappage credit, I think at the very least it should be registered, insured, roadworthy and owned by the same person for at least a year.
Bailey Wood, a spokesman for the National Automobile Dealers Association, says the NADA will be very involved in helping craft a fair law. One thing the NADA will push for, he said, is the government use its nationwide data base of vehicle identification numbers to exclude cars that have been totaled, flooded or stolen.
Something has to be worked out. The government needs to set aside a certain amount of time for a person to own a certain vehicle, Wood said.
Its going to take some input from people who really know the used car market to make this a fair program. Hopefully, the NADA and others will help the government create a national scrappage system that delivers maximum value to both the government and consumer while at the same time protecting the tax payer.
I like my trusty old Rover. Its been a great car, and its a classic now. But if the scrappage law passes, the Rover will give way to a flashy new Chevrolet Camaro, which gets 29 miles per gallon.