Cash For Clunkers 2.0?


Depending on who you ask, Cash for Clunkers was either a spectacular success, or a spectacular failure.

These are the facts though. Cash for Clunkers helped sell 690,000 car sales in 30 days, at the cost $3 billion to taxpayers. While overall auto sales are down in 2009 compared to 2008, December was a strong finish for almost every brand. In the four months since the program, car sales have also been up as a whole. Chrysler and General Motors are out of bankruptcy. 2010 is looking like a much better year for car buyers.

Still, the question lingers. Are we going to get a second round of Cash for Clunkers?

At the opening of the 2010 North American International Auto Show in Detroit last week, Transportation Secretary Ray LaHood (the same guy proposing changes to the way public transportation projects are proposed and financed) seemed pretty happy with how Cash for Clunkers went, saying, “This was the most wildly successful program ever, selling 800,000 cars in less than 30 days. You see no criticism of Cash for Clunkers in America.”

Umm, apparently LaHood missed the analysis by Edmunds, which stated that C4C did little to spur new car sales. Of the 690,000 cars sold during C4C (where LaHood got that extra 100,000 I don’t know), Edmunds says that 565,000 of those would have been sold anyways. New car buyers trading from inefficient gas guzzlers getting 18 mpg or less to fuel sippers qualified for either a $3,500 or $4,500 dollar tax credit. It is hard to know for sure how many people actually bought cars because of Cash for Clunkers, and if this really did rob from future sales. But if you follow Edmunds train of thought, the cost per-car sold to the government was about $24,000.

But criticism is healthy, right? It could help shape a better, more streamlined Cash for Clunkers program in the future. And with the economy stagnant at best right now, a second stimulus and another round of clunkers might be in the works for the Obama Administration. And it could help. I’m no economist, so this is all speculation of course. Still, few things put a smile on a potential voter’s face like a fat government handout. Chances are, IF Cash for Clunkers came back, the incentives would be less, the process more streamlined, and hopefully the mpg requirements a little more lenient.

Still, most of the automakers finished 2009 up over 2008 levels. Ford posted a whooping 33% gain in December of 2009 compared to December of 2008. The economy has leveled out a bit. Most importantly, automakers are coming out with MUCH better cars in the next few years, including a bevy of electrics and hybrids.

What do you guys think? Cash for Clunkers Round Two? Or should we just leave well-enough alone?

Sources: Motor Trend | Edmunds | Image: Chris DeMorro

Christopher DeMorro

A writer and gearhead who loves all things automotive, from hybrids to HEMIs, can be found wrenching or writing- or else, he's running, because he's one of those crazy people who gets enjoyment from running insane distances.