Cash for Clunkers was even Better than Originally Thought

The 2009 Cash for Clunkers program was found to have a better impact on new car sales, the automotive job market and the environment than was previously thought, and did not have nearly the impact on future sales that the industry experts had originally predicted. According to a year long study conducted by Maritz Automotive Research Group determined the outcome from Cash for Clunkers, or the CARS programs was actually very positive in many areas, and largely responsible for the positive upward trend that the auto industry is still enjoying. The study included 36,000 CARS buyers in the study known as New Vehicle Customer Study.

In analyzing New Vehicle Customer Survey (NVCS) data on new-vehicle buyers in July and August, 2009, that included both CARS and non-CARS buyers, it was found that:
    - Four percent of shoppers would have still bought or leased a vehicle
    - 31% bought specifically because of the program
    - 13% wanted to utilize the program, but were not eligible, still purchasing
    - 52% of buyers did not use the plan and did not plan to
Therefore 80% of the consumers, 542,000 of the 677,000 transactions were motivated to buy or lease primarily because of the CARS program.

Stealing from the future?

So many of the concerns from the industry were that Cash for Clunkers robbed future sales, and damaging opportunities to truly help the automotive industry improve. The Maritz study was able to prove that was not the case. The "hangover" period of September was mostly due to the fact that inventory was very limited due to the amount of vehicles sold in July and August. The study indicates that it was not the "normal" new-vehicle shopper that took advantage of the program but rather reached into a pool of consumers that would have regularly been used vehicle buyers, first time buyers, shoppers with trade-ins with over 100,000 miles and consumers looking to increase the size of the "family fleet."

Sixteen percent of the CARS program buyer was a first time buyer, compared to 12 percent of the typical new car buyer and 31% were increasing their fleet compared to 22 percent of the typical buyer. Over half, 58% of buyers were trading in a vehicle that was purchased used, compared to only 28% of typical new car buyers. Over 80% of the trade-ins had over 100,000 miles and about half of them were over 10 years old.

Affecting the auto job market.

According to the National Highway Traffic Safety Administration's report Cash for Clunkers created or saved nearly 60,000 jobs.  Data from the Center for Automotive Research, CARS resulted in 40,200 new jobs, 11,000 of those were in Michigan and Ohio.

Brand Loyalty affected.

Dealer and brand loyalty did not figure into the program at all. Many people were looking for my availability or eligibility on their trade in. With a tremendous boost to Internet research and auto destination sites, more people switched brands that they would have not have previously thought of. In fact, only 21% of CARS participants were loyal to a particular brand, where 40% of typical new car shoppers still maintain loyalty. Only 8% of participants were loyal to a particular dealer, versus 23% that are usually dealer loyal.

Impact on the Environment.

The impact on the environment, one of the least discussed successes from the Cash for Clunkers program, was quite strong. About half of the units that were purchased under the CARS program were older than 10 years and had mileage of greater than 100,000. These older vehicles averaged around 15.8 mpg and were replaced with vehicles that averaged 24.9 mpg. That's an annual fuel savings of approximately 33 million gallons.

The estimated reduction in carbon dioxide and greenhouse gases over the next 25 years is 9 million metric tons, a social benefit of $278 million over the next 25 years.

So overall the Cash for Clunkers program was positive in many areas, revitalizing the automotive industry from sales to jobs, all while improvement the air that we breath and saving millions of gallons of natural resources for years to come.

Data Source: Maritz Auto Research Group, NHTSA, AutoRemarketer