Conceived as a prime weapon in the federal government’s economic stimulus package, the much-ballyhooed Car Allowance Rebate System – popularly known as “Cash for Clunkers” – seems to have been a success, at least in terms of luring Americans into showrooms at a rate auto dealers haven’t seen in years. The Department of Transportation reports that 690,114 sales were registered under the program, with the total value of the rebates claimed by dealers totaling $2.88 billion.
But exactly who were the biggest winners under this program, aside from the consumers who leveraged some virtually worthless old gas-guzzlers for as much as $4,500 toward a new model? As it turns out, the import brands, which had more fuel-efficient cars to offer than the domestics, moved the most metal, accounting for 61.4 percent of all vehicles sold under the Cash for Clunkers promotion. By comparison, Detroit’s “Big Three” automakers – Ford, General Motors and Chrysler – garnered 38.6 percent of applicable sales. This is proportionately less than their combined share of the U.S. market, which stood at 45 percent over the first seven months of 2009.
According to the DOT, all but two of the top 10 selling vehicles under the program – the Ford Focus and Escape – carried Honda, Hyundai, Nissan or Toyota nameplates. Toyota scored 19.4 percent of all eligible sales, primarily with its Toyota and Scion brands. By comparison, General Motors’ eight combined divisions took 17.6 percent and Ford Motor Company’s four brands registered 14.4 percent of CARS sales. Honda registered 13 percent of eligible transactions, with 8.7 percent going to Nissan.
Not surprisingly the most traded-in clunkers were all domestic trucks, vans and SUVs. That’s because the rules were skewed to get older, low-mileage trucks off the road. To qualify, vehicles had to carry a fuel economy rating of 18 mpg or less and be less than 25 years old. When we searched a database of 10-year-old vehicles, for example, virtually the only non-trucks we could find that would have qualified were a handful of high-powered sports cars that were worth much more in trade than the government’s rebate program would have allowed.
Aside from providing a much-needed economic shot in the arm, Cash for Clunkers’ secondary goal was to replace inefficient older vehicles on the road with higher mileage models. In that regard the program was reasonably, though not necessarily dramatically, successful. The average fuel economy of traded-in vehicles was just shy of 16 miles per gallon, while the ones that replaced them in Americans’ driveways registered around 25 miles per gallon.
According to estimates provided by the Environmental Protection Agency, someone driving 15,000 miles per year who chooses a 25-mpg vehicle instead of one that gets 16 mpg will save 7.7 barrels of crude oil and emit 4.1 tons fewer greenhouse-gas pollutants annually. Multiplying these figures by the number of vehicles sold under Cash for Clunkers indicates the program has the potential to save as much as 5,313,878 barrels of oil and 2,829,467 tons of CO2 emissions over the coming year. Unfortunately, the actual savings is likely to be a lot less, since not all of the models traded in were likely daily drivers.
Of course industry-wide sales have already tanked by and large since the program expired, though by all accounts it did help clear up dealers' 2009 inventories, at least as far as small-to-midsize cars are concerned. On the other hand, those in the market for a large truck will be treated to automakers' rebates on outgoing 2009 models that put the Cash for Clunkers incentives to shame. How rich are they? Try $7,500 cash back on a Cadillac Escalade. It's $6,500 back on a Chevy Tahoe or Suburban SUV, $6,500 on a Dodge Ram and $5,000 on a Nissan Titan pickup.
Image courtesy SF Appeal.
