Recapping Cash for Clunkers, as auto sales crash

Auto-sales trackers are reporting a crash in purchases nationwide after the Cash for Clunkers stimulus rebate program ended last month. It’s the same in Colorado, where car sales projections are off by record percentages, “probably as bad [a drop] as anything since World War II,” Tim Jackson, president of the Colorado Automobile Dealers Association, told the Colorado Independent.

But Jackson said the dip in sales is only further evidence that the Clunkers program was a success.

“That $3 billion did exactly what it was intended to do. The rest of the Stimulus, I don’t know… I know that that program worked.”

According to auto-industry research site Edmonds.com, new-vehicle sales across the country are expected to fall 40 percent from sales in August, when the Clunkers program was spurring activity. Jackson says it’s impossible to get exact numbers this early but that in Colorado the drop looks closer to 37 percent.

It’s bad, he said, and so worth reviewing the clear lessons learned from Cash for Clunkers.

For one, the money was exhausted in 3.5 weeks. He thinks the government could have spent less money per trade-in car and stretched the program over a longer period of time, selling more cars in the end.

He also believes that the gas mileage requirements could have been higher.

“The average moved from 15 miles per gallon to 25 miles per gallon. If we just ramped it up by 3 to 4 more mpgs, we would have doubled [average] gas mileage. That would have had enormous benefits all around.”

The government should have also looked to move the model year of trade-in vehicles back.

“Cars manufactured before 1984 are clunkers,” he said. “We could have offered less money for those vehicles but enough to get more of them off the road, maybe $1000 or $1500 for each of those cars.”

Finally, a major note to take away from the program is that when it comes to car sales and shaping the complexion of the kinds of cars that fill U.S. roadways, government incentives can have an enormous effect.

“Tax incentives for efficiency will work. Clunkers demonstrated clearly that the government can spur auto sales.”

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