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Cash For Clunkers In Retrospect

28th August 2009

The cash for clunkers program ended this week. Now in case you have been living under a rock, the cash for clunkers program was a government backed initiative to try and revive the ailing motor industry in the US. There are quite a few mixed reviews ofcourse about the success and effects of this program. Naturally, the Department of Transportation has labeled the program a "great success", however analysts beg to differ and so do I. Why?

 

Personal Finance Firstly, according to new data the increase of car sales for the motor industry resulting from the cash for clunkers program amounts to less than 3% for the year, a far cry from being a "great success."

Secondly, the cars that were mostly purchased were Asian cars rather than American cars which again is a blow to our already struggling car industry. According to a report published on Tuesday by Consumer Reports, the top ten list of most purchased vehicles looks like this:

Top 10 cash for clunkers purchases

  1. Toyota Corolla
  2. Honda Civic
  3. Ford Focus
  4. Toyota Camry
  5. Hyundai Elantra
  6. Toyota Prius
  7. Nissan Versa
  8. Ford Escape FWD
  9. Honda Fit
  10. Honda CR-V AWD

Ford is the only American brand that managed to make it to the top ten list. This is worrying to say the least. Thirdly, according to a report by BusinessWeek, Toyota was the biggest beneficiary of all getting 19.4% of sales, with General Motors getting 17.6% and Ford getting 14.4% of sales from the program.

Given this information, from a numbers perspective, the cash for clunkers was really not a success, however looking at the cars making the top ten list, definately the old gas guzzlers were traded in for more fuel efficient cars.

 

"Only buy something that you'd be perfectly happy to hold if the market shut down for ten years." - Warren Buffet

 

Comments (5):

Carol Says: I think it was a great success too regardless of what this post says! | 08.28.2009 |

Ian Says: I don't think it was such a great success either. Now we're going to blow even more tax money with the cash for refridgirators program. Oh no....When will this ever stop? | 08.28.2009 |

Jade Says: The program worked and did some good for our car industry as well as stimulate the dying demand for our car industry so don't make it sound like the govt failed, they did what they could | 08.028.2009 |

Patrick Says: If it was not a failure then why did it only account for 3% increase, @Jade? | 08.28.2009 |

Merlin Says: I don't see why take perfectly good cars and trash them then put out new ones which are mostly not even ours to start with, Toyota benefits most from the program, I smell a conspiracy here | 08.28.2009 |

 

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