I don't like buying new cars. And while my family's current financial situation is better than that facing many others, with two kids in private college this fall and economic uncertainty that could affect both my job and my wife's, we are trying to be financially cautious. And I don't like buying new cars. That being said, I went out and bought a new car on Monday - the first new car I have ever had (and I am 47 years old).
The Car Allowance Rebate System (CARS), also known as "Cash for Clunkers" paid me $4,500 to turn in my 1994 Mercury Villager (rated at 18 mpg, probably getting much less) for a 2010 Toyota Corolla rated at 28 mpg. I was motivated by three factors, in priority order:
(1) the $4,500 (plus $1,000 of dealer incentives) was a high enough percentage saving on an $17,000 car to be worth the financial risk (the expenditure puts us at higher risk of having to borrow out of retirement savings if things go poorly in the next 6 months).
(2) it is an investment in the American economy. I know, it's a Toyota which seems inconsistent with that sentiment, but I actually identified six cars based on research about quality and reliability, and of the six the Toyota actually had the highest percentage of domestic content (60%). And, as a bonus, the $1,200 of state tax will help California.
(3) it is a concrete step to reduce our carbon footprint (although the manufacture of a new car creates a heavy carbon "debt" to work off, I expect to use this through 2025.
Like most other government actions, this is not perfect. This is most accessible to affluent families who are more able to take a financial risk at this point. And while we upgraded from 18-28 mpg, you can get much of the incentive for a much more limited improvement. It's almost certainly not the biggest bang-for-the-buck in reducing carbon footprint, it may not be the most effective stimulus, but it did motivate a fairly profound change in our financial behavior.
And while it's a new car, I insisted on getting a stripped down model - I didn't know that they still made windows you crank down by hand, but now that I have them, I hope to be driving such a car 15 years from now