‘Cash for Clunkers’ Yielded Almost 700,000 Sales
Aug. 26 -- The U.S. government’s “cash for clunkers” vehicle trade-in program produced almost 700,000 automobile sales, the Transportation Department said.
Rebate applications valued at $2.88 billion were submitted by the deadline
, the department said today in a statement. The program, which offered buyers discounts of as much as $4,500 to trade in older cars and trucks for new, more fuel-efficient vehicles, ended Aug. 24. The government granted dealers an extra day to file repayment applications.
The initiative helped restore demand for the slumping auto industry, prompting General Motors Co., Ford Motor Co. and Chrysler Group LLC to boost production plans in the second half of the year. While sales are likely to fall to a “more sustainable level,” any offsetting effect on U.S. growth in future years is expected to be “gradual,” the White House Council of Economic Advisers said this week.
The effort “was incredibly well received judging just by the number of consumers that participated,” said George Pipas, Ford’s sales analyst. “You’ve got an economic stimulus program and an environmental program, and seldom do those two programs sleep in the same bed.”
The U.S. had estimated the program’s initial $1 billion would spur 250,000 clunkers sales. That amount was exhausted the less than a week after the initiative began. Congress added an additional $2 billion intended to keep it going through Labor Day, which is Sept. 7.
The Focus, made by Dearborn, Michigan-based Ford, was the only vehicle from a U.S.-based company among the top five purchased under the program. The others are Toyota Motor Corp.’s Corolla and Camry, Tokyo-based Honda Motor Co.’s Civic and the Elantra, made by Hyundai Motor Co. of Seoul. Overseas-based automakers manufacture some cars in the U.S.
The average fuel economy of the vehicles traded in was 15.8 miles per gallon and the average fuel economy of vehicles purchased is 24.9 mpg -- a 58 percent improvement, the Transportation Department said.
The program will save 9 million to 10 million barrels of crude oil over the next five years, with consumers saving $700 to $1,000 annually at the gasoline pump,
Ford’s Pipas said.
Dealers complained of slow reimbursements from the program and government-computer glitches that hindered applications for repayments.
Senate Commerce Committee Republicans, led by Kay Bailey Hutchison of Texas, sent a letter to Transportation Secretary Ray LaHood expressing concern over dealer-reimbursement delays and urging greater transparency in the clunkers program.
The government said there was “overwhelming demand” on the clunkers computer system.
Economic benefits of the program will persist in coming months as carmakers replenishing inventories hire and expand production, the White House Council of Economic Advisers said.
The initiative will boost U.S. third-quarter gross domestic product by 0.3 to 0.4 percentage point and create 42,000 jobs by the end of 2009, according to the CEA’s estimate.
There are signs that demand may be starting to fade. Expression of an intention to buy a car is off 50 percent from the program’s peak, research firm Edmunds.com of Santa Monica, California, said in a statement today. Purchase intent is a leading indicator of sales within 90 days, Edmunds.com said.
LINK:?Cash for Clunkers? Yielded Almost 700,000 Sales (Update3) - Bloomberg.com