Cash for Clunkers took place 3 years ago, many good cars were traded and destroyed which adversely affected the used car, used auto parts and new auto parts market. Yes, new vehicles were sold that energized the auto manufacturers however it has been argued that all CFC did was to speed up the process for those considering a new car because after CFC ended sales dropped to extremely low levels once again. The argument was also that it was a green program to get gas guzzlers off of the road for a more economical vehicle. Did this do this, yes however statistics show that most older vehicles are driven less miles than new vehicles so the fuel consumption is about the same. Also, the amount of emissions that was cut is minimal because the 690,000 cars and trucks destroyed are a small fraction of the US fleet. One irony is the Greenies that hate Excursions and Hummers did not get a chance to destroy these vehicles because they are considered heavy duty trucks and were not eligible for the program.
"Beyond the economic impact, there’s also an environmental component to the program. The Department of Transportation says about 690,000 cars have been swapped for more fuel-efficient models as a result of the CARS program. According to a study by Christopher Knittel of the Center for the Study of Energy Markets, that would reduce annual gas consumption in the United States by roughly 186 million gallons per year, lowering emissions of carbon dioxide, the most important element in the greenhouse gases that are implicated in global warming, by about 1.9 million tons a year.
While that may sound like a lot, consider that the United States consumes about 378 million gallons of gas a day, and released about 6.4 billion tons of greenhouse gases into the air last year. Of course, cleaner-running cars also spew fewer air pollutants such as carbon monoxide, nitrogen oxide, volatile organic compounds, benzene, formaldehyde, particulate matter, and other toxic materials that contribute to smog and respiratory disease."
http://www.cbsnews.com/8301-505123_162-51333886/cash-for-clunkers-did-it-work/Now, 3 years later many of these new cars are now approaching the 100,000 mile mark, many people still owing money on the cars. The repossession rate for these cars is higher than the average and many people have experienced buyers remorse.
http://www.lemonlawspecialists.com/blog/?p=818http://content.usatoday.com/communities/driveon/post/2010/01/many-cash-for-clunker-buyers-have-higher-repo-late-payment-rates/1As for buyers' remorse, almost 1 in 5 clunkers program participants
who took part in a survey this month said they regret buying a new vehicle under the program. Among those who didn't use the program, the regret rate was slightly more than 1 in 20.
As a result, perhaps it's no surprise that more subprime customers who took part in the program tend to be late with payments than those who did not. Many had expected the economy to rebound by now.
"Faced with a new monthly payment of $250 to $350 per month, many of the (clunkers program) users admit they didn't think past the new car smell," CNW says in its January newsletter. "Most, however, anticipated the economy improving substantially between last July and today and felt that improvement would give them the financial boost necessary to at least offset some of the additional monthly payment."
Was CFC worth the cost to the American taxpayer? It has ben calculated the cost for each clunker traded was not $4500 but rather $24,000:
http://www.edmunds.com/about/press/cash-for-clunkers-results-finally-in-taxpayers-paid-24000-per-vehicle-sold-reports-edmundscom.html?articleid=159446&To conduct the analysis, the Edmunds.com team of PhDs and statisticians examined the sales trend for luxury vehicles and others not included in Cash for Clunkers, and applied the historic relationship of those vehicles to total SAAR to make informed estimates. These estimates were independently verified through careful examination of sales patterns reflected by transaction data. Once the numbers were determined, Edmunds.com's analysts divided three billion dollars by 125,000 vehicles to arrive at the average $24,000 per vehicle.
Another immediate effect was a decrease in the used car and parts market that hurt those unable to qualify or afford a new car. The used vehicle market prices sky rocketed as the cars many lower income people would purchase dried up.
Used auto parts, especially engines, became unavailable for those wanting to repair their current vehicle and the cost for the replacement engines jumped tremendously. The used parts market could not absorb the amount of junked vehicles coming into their yards and many parts were not recycled as they would have been during the normal auto end of life process.
Also, people that did not own vehicles that qualified under the program felt "punished" because they could not trade in their 15 year old Honda Civic and get $4500 for it.
Looking back and researching the whole program it can be clearly seen that the program was a failure in many ways, hurting new buyers with the allure of a new car, those wanting a used car at a reasonable price, the non qualifying buyer with an older fuel efficient car, the used auto parts industry, a minimal reduction in emissions and the cost per vehicle to the US taxpayer.
