NCPA - National Center for Policy Analysis


August 28, 2009

The cash-for-clunkers program offered incentives to trade old gas guzzlers for new, more efficient vehicles and resulted in 690,114 sales.  The Transportation Department's deadline for voucher submissions was Tuesday, so the blowout is officially over.  The taxpayers' cost will be nearly $2.9 billion, says columnist Chris Woodyard.

Now there's a calm after the storm.  Car-shopping service says half as many people are researching a new car purchase on its website as were looking during the peak of the clunker frenzy.  Traffic is even off 10 percent from June levels, ahead of the clunker kickoff on July 27.

Some buyers now face larger car payments, says Woodyard.  Thanks to the Car Allowance Rebate System, many folks took home new vehicles instead of used. 

According to a survey by Kelley Blue Book:

  • In July, only 12 percent of shoppers who intended to buy used cars said they were swayed enough by CARS to buy new.
  • By August, this figure climbed to 20 percent.

A CNW Marketing Research survey of about 1,000 clunker traders found:

  • 17 percent now have doubts about the decision.
  • Most said their regret is about having monthly car payments despite incentives of up to $4,500.

Home builder John Kounalis of Flower Mound, Texas, says he misses being able to throw construction scrap into the bed of his old Dodge pickup, and his new Ford Escape SUV is "going to cost me a little more money."  But he does say it's refreshing to have a working horn and wipers, and dependable headlights, reports Woodyard.

Source: Chris Woodyard, "With Clunker Program Over, Some Fear Auto Sales Drought," USA Today, August 27, 2009.

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