Friday, August 7, 2009

Crunching some Confusing Numbers in the "Cash for Clunkers" Game

My old van, a 2001 Dodge Caravan w/ 195,000 miles and an '18' on the government scale is on the top ten list of most traded in 'clunkers'. Worth $3500.00 on the purchase of a new vehicle with at least 22 mpg rating.

One of the vehicles I'm considering is the Honda CR-V. The semi-tricked out version runs about $27,500.00, after a skinny deal of about $1000.00 off the sticker price given by the dealer. (Plus TTL, but those remain the same, so I'll leave those figures out.) No other trade in money or deals will be offered.

This brings my van/CR-V trade deal to $24,000.00 with a 2010 model and the government cash-for-clunkers deal.

Lets look at something slightly different:

Looking at the Car Max site - with I typically use for real world used car values since I'm a Dave Ramsey fan, and have a hard time not letting someone else take the new car devaluation hit.

Here's a 2008 Honda CR-V that is tricked out like the new one I asked the dealer about. It's two model years old, and has 20K miles. ( History shows it was a 'fleet vehicle', which means a rental) The Car Max price is $20,998.00 Plus a drive to Indianapolis, where this example currently is parked. The website calculator says that I would get a $1250.00 trade in on the van.

This brings my van/CR-V deal to $19798.00 with the straight-up trade my old van for a newish CR-V.

One more comparison:

We looked at a Mazda RX-7 a couple of weeks back. Sticker price on that vehicle was about $27,800.00. The first 'deal' I was offered was $1,000.00 off the sticker price and $3000.00 trade-in for the van. That brings that comparable vehicle - brand new w/o the government program to $23,800.00.


New Honda CR-V with $3,500.00 government money $24,000.00

New Mazda CX-7 straight-up w/ trade in allowance $23,800.00

Slightly used Honda CR-V without government assistance $19,798.00

To me, this sounds like one of those screwed up math story problems where you 'lose' a dollar while seeming to be getting the best deal. Can you see where the dealer is getting $3,500.00 from the government, yet I'm paying about the same price for the vehicle? Maybe the 'cash for clunkers' program works better when you think of trading a Ford F250 for a Prius, or something - but the math just isn't working for me.

PS: I still want a Volkswagon Tiguan. But it's the same kind of 'want' as when a little girl says she 'wants' to be a princess. Ain't in the cards.



medic3327 said...

Sounds like the Gov't new math where they say that "cap & trade" will create millions of new jobs, but every other study but the Gov't study shows we will lose millions of jobs and it will cost those of us that still have them thousands a year.

vxbush said...

A new car is almost always going to be more expensive than any used car, no matter how many incentives are given. And if you get a used car, then your old van is still available for someone else to buy at a bargain price at the dealership--and to me that's better than the van ending up as scrap metal.

argonaut said...

I finally started seeing a discussion about the C4C program actually having the effect of poaching the car sales we'd normally see *next year*.

So we get gov't skewed sales shifting from 2010 back into 2009--and mostly for newer vehicles (thereby keeping the really old clunkers on the road).

So old clunkers are actually less "clunky" than newer clunkers. Which is good--we want to keep the really old clunkers on the road. Oh wait...

I wonder what the dealerships will think next year when folks that already got their new clunker-replacement don't buy again...

I know: Maybe the gov't will come to our rescue again and offer 5billion dollars in a newer clunkers for cash program.

Yeah... That'd be perfect.