History on Cash for Clunkers in Less than 3 Minutes
Our brief post summarizes all the key highlight of the history on cash for clunkers program from 2009.
The fact is “Cash for Clunkers” is more than just a funny name.
It’s a reminiscence of the helping hand lent by the US Federal Government with the Car Allowance Rebate System to boost the crisis-ridden automotive industry in 2009.
It’s a period that saw 2 of the 3 Big’s in the automotive industry undergo restructuring aided by the government after having been dealt with a severe financial blow.
A program originating out of the Great Recession offered a whopping three billion in cash incentives to people willing to trade their older vehicles for newer fuel conserving ones.
The “Cash for Clunkers” program in 2009 provided a credit up to $4,500 for purchasing a new vehicle in exchange for any old piece-of-junk vehicle.
With a possible economic crisis looming over the auto industry today due to the ongoing COVID pandemic, some insiders in the auto industry are clamouring for immediate action.
But was the original Cash for Clunkers a success?
Depends on who you ask.
Those who believe it was successful point to the total number of vehicles sold and the estimated environmental impact of the vehicles removed.
However, there are many who argue that the increased sales simply pulled ahead of future sales that would have taken place anyhow, resulting in a zero net gain at the cost of $3 Billion to the taxpayer! The program also unintentionally drove up the prices on used cars (causing strain for the poor who could not buy new). Furthermore, critics argue that it was foreign manufacturers who won the lion’s share of new car sales and that a good portion of the new cars bought were actually fuel-inefficient SUVs and Crossovers.
Regardless of what experts think, it sounds like there is a real possibility of a Cash for Clunkers 2.0. According to a recent review by the Motor Trend, an enactment of a similar policy is in the cards and could have an even bigger impact, surpassing the 14 billion dollars in vehicle sales stimulated by the first cash for clunkers effort.
Another analysis by Morgan Stanley points to a similar stimulus that could extend even longer this time and could generate a whopping 50 billion dollars in auto industry transactions within a timeframe of 6 months beginning this fall.
So are we in for a Cash for Clunkers 2.0?
Well, it’s a real possibility with President Biden’s stance on electric vehicles and his outspoken interest in a rebate program to stimulate sales of electric vehicles manufactured in the United States.
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