Cash for Clunkers success pales next to its hypeDavid Welch
The government’s Cash for Clunkers program is over and still the spiff is getting more post-event coverage than any Super Bowl I can remember. The Transportation Department, not surprisingly, has labeled the program a great success. Some analysts have been far less effusive. They say the program was effective in selling cars, but the boost won’t last long enough to really help the car industry for very long. Edmunds.com also shows different data than the government, claiming that pickup trucks sold better than the Transportation Department is letting on.
While the program did its job, its real contribution has been less than the hype. Cash for clunkers did spur sales. It sold 690,000 cars and many were compacts like the Ford Focus and Honda Civic. So it did accomplish the mission of scrapping some old iron and selling some more efficient cars. That said, the boost will amount to less than a 3% increase for the year. That’s hardly the windfall that Germany achieved from a similar program, which pushed sales up an average of 30% a month since March. There may also be a hangover in car sales in the U.S. Edmunds says that purchase intent is now down 11% from June, meaning that fewer people are looking at new cars. So sales could slump in the coming months. In fact, J.D. Power says that more than 70% of sales may have happened later this year even if the government hadn’t spent $3 billion on the clunker program. One other point: Toyota was the biggest beneficiary, getting 19.4% of sales, with General Motors getting 17.6% and Ford getting 14.4% of sales from the program.
Then there’s a minor tussle over the most popular cars. The government’s figures say that the top 10 seller were all compact cars and small suvs. Without all the data in, Edmunds says the Ford F-150 pickup and Chevy Silverado were also in the top 10. We may get a final call on that when all the data is in.
The bottom line: The program did its job, but with just $3 billion in funding its mission was always going to be limited. Cash for clunkers came and went in about two months. But now automakers must sell in an economy whose fundamentals are still weak. It will be a tough road for some time to come.