Cash For Clunkers More Successful Than First Thought?

Just how much help was Cash for Clunkers for automakers and America? A new study by The Maritz Automotive Research Group suggests that the Cash for Clunkers program may have been more successful than first thought.

Cash for Clunkers — which spent about $2.8 billion in incentives on about 690,000 cars sold last summer — has been criticized for costing too much and having too stringent of guidelines about what cars could be traded in. Still, Ford and GM sales are up, as are car sales as a whole, so maybe all that hubbub about robbing from “future sales” wasn’t all that accurate.

The study claims that of the 690,000 cars sold under the Cash Allowance Rebate System, 542,000 sales were generated that might not have otherwise happened. This is because many of those buyers would have bought used cars instead of new ones. But government incentives of $3,500 to $4,500 convinced them to instead go buy a new, more fuel efficient vehicle. In addition, there were 250,000 “halo” sales that the study says were made to customers who didn’t qualify for incentives or bought a car that didn’t get good enough mileage to qualify for the rebates.

I still have my reservations, especially about the 250,000 “halo sales”. But it is nice knowing a government program works as intended every now and then. The study makes sense; there are people out there (like me) who only buy used cars. But I seriously contemplated trying to swing a new car last summer during the CARS rebate, but I couldn’t bring myself to trade in my Jeep. You see, all those traded-in vehicles had their engines killed by draining the oil and pouring a sodium silicate solution into the engine. I couldn’t do that to my Jeep, and I object to destroying a perfectly good engine at a time when people could use cheap parts to fix their cars.

This new study also puts holes in Edmunds argument that each Cash for Clunkers deal cost taxpayers $24,000 per car. They based their costs on how many cars the industry would have likely sold, and estimated the program generated just 125,000 sales. If you bank on the Maritz estimates, the cost-per-car to taxpayers was more like $5,535… which really isn’t all that bad. There isn’t any way to know for sure, though one look at the industry right now appears to reflect a rebound in sales. This is especially true for GM and Ford, which saw their sales increase 12% and 43% respectively, though 2009 auto sales as a whole were miserable, coming in at just 10.4 million units sold.

We’ll just have to wait and see how 2010 turns out, though round 2 of Cash for Clunkers might not be out of the equation.

Source: The Detroit Bureau

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.