Why Not A 'Cash-For-Ford-Focus' Program?

With the wild success of the Cash for Clunkers program, I've seen a number of people asking why the program didn't also come with a requirement that the new car be made in the U.S. So I did an experiment.

I pretended I had a 1999 V6 Ford Explorer--just the kind of car this program aspires to get off the road. I started with this list of cars assembled in the U.S., then cross-referenced those cars with the CARS.gov site to see what would get me a full $4,500 rebate. I always opted for the smallest automatic engine I could get and I looked only at 2009 models.

And here's what—doing a quick review—I could get:

In other words, if you wanted to make sure the Cash for Clunkers program went into a car that was assembled in the U.S. with a U.S. engine and transmission, you'd be requiring consumers to buy a Ford Focus. (And, in fact, Ford Focus was the most popular car under the program.)

And maybe a Toyota Venza or Ford Escape (in which case, in both cases, you'd be using the program's lower requirements for MPG improvements for small trucks). 

A couple of caveats about this. First, I'm sure I missed something--probably a hybrid or someone's small truck or crossover that qualifies under lower standards for MPG improvement (I apologize in advance for whatever I missed). Which of course demonstrates that for several of these—Escape, Ranger, B Series, Tribute, Outback, and Venza--a new buyer would only get the benefit because of the lower requirements for trucks. Also, if someone had an even bigger clunker than a Ford Explorer, they'd get the full $4,500 benefit from more cars, including things like Accords and Camrys and Malibus (the Ford Fusion is assembled in Mexico) that are assembled in the U.S. but do not improve MPG enough over the 16 MPG Explorer to qualify for the full bonus.

You see, manufacturers--whether they're American or Japanese, union or non-union—simply don't build many efficient cars in this country. There are a lot of reasons for that, but the basic reason is that the margins on efficient cars are much smaller, and with higher labor and--more importantly, health care costs in the U.S., it is a lot harder for a manufacturer to build small cars profitably in this country than to build trucks. And so, manufacturers—whether they're American or Japanese, union or non-union--build bigger cars in the U.S. and import the smaller cars.

And note, this is going to get worse in the near future before it gets better. While GM has wavered about whether the G5 will go the way of the rest of Pontiac, it appears that it will disappear, as will the Saturns. And Toyota is most likely going to close its Fremont, Calif. plant and send Corolla production to Canada, where it won't have to pay health care. (Note, too, that Honda only makes some of the Civics sold in this country in the U.S., with the rest assembled in Canada.)

GM and Chrysler both promised to build minis they'll introduce in upcoming years—the Spark and the 500—in the U.S., but that will take a few years. And Toyota promises to build the Prius in Mississippi one of these years.

But until then, any effort to get clunkers off the road will by definition be a Cash for Imports or a Cash for Ford Focus program.

Views expressed on this page are those of the authors and not necessarily those of Campaign for America's Future or Institute for America's Future