Select Page

Despite some problems, the Cash for Clunkers program was a big success, contends a new study.

Despite some well-publicized problems with the administration of last year’s so-called Cash for Clunkers program, the venture performed even better than anticipated, according to a new study that shows it brought significant incremental sales to a struggling U.S. automotive market.

In all, the Cash Allowance Rebate System, or CARS, directly generated 542,000 sales that would not have been made without the program, which offered qualifying buyers incentives of up to $4,500, reveals a new study by Maritz Automotive Research Group.  In addition, about 250,000 “halo sales” were created, according to Maritz Vice President Dave Fish.  Those were sales made to buyers who either didn’t qualify for the tax credits or who decided to purchase a vehicle that wan’t covered by CARS.

“As far as taxpayers are concerned,” said Fish, “from a return-on-investment standpoint, (the program) certainly met its goals” of both stimulating the automotive market and removing inefficient, polluting cars from the road.”

More important, the Maritz data reveal, the Cash for Clunkers program did not have a significant pull-ahead effect.  That was a key concern raised by critics who feared potential buyers would simply come to market earlier than they’d planned, resulting in a sharp downturn in sales after CARS was completed.  In fact, there was only a modest dip in the market in September, stressed Fish, not a wholesale plunge that could have stretched out for months.

“We did not mortage the future because these buyers are different” from traditional new car customers, Fish said.  Those who took advantage of the CARS program, he stressed, were far more likely to buy used cars than new if they weren’t given the government tax incentives.

“We were pulling from the used market, people who normally wouldn’t buy a new vehicle,” said Fish.

Asked whether there is justification to repeat the CARS program, Fish stressed that more research is necessary to ensure there’s a large enough pool of used car owners willing and able to switch to something new, but he added that, “My sense is there are a lot more (which would) merit revisiting the program.”

Don't miss out!
Get Email Alerts
Receive the latest Automotive News in your Inbox!
Invalid email address
Send me emails
Give it a try. You can unsubscribe at any time.