Cash for Clunkers Replaces 700,000 Vehicles with More Efficient Models

The numbers are in on Cash for Clunkers, and the program brought about even greater gains in fuel economy than it set out to.
From EERE Network News
September 2, 2009
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Eighty-four percent of the vehicles traded in under Cash for Clunkers were trucks, but only 41 percent of the program’s participants used their rebate to purchase a new truck.
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The popular Cash for Clunkers program ended its run on Aug. 25, and the program is estimated to have removed nearly 700,000 inefficient vehicles from U.S. roads.

Officially known as the Car Allowance Rebate System (CARS), the program achieved greater fuel economy gains than originally expected, as consumers chose more fuel-efficient models than were required by the program.

In fact, the average fuel economy of the traded-in vehicles, which were crushed, was 15.8 miles per gallon (mpg), while the average fuel economy of the newly purchased vehicles was 24.9 mpg — a gain of 9.1 mpg, or 58 percent.

That figure makes sense for trade-ins of old cars for new cars, because those trade-ins earned the maximum rebate with a 10 mpg increase in fuel economy. However, analysts expected trade-ins of light trucks (sport utility vehicles, pickups and vans) for new light trucks to drag down the fuel economy gains, as such trade-ins could earn the maximum rebate with a fuel economy gain of only 5 mpg. But according to the U.S. Department of Transportation (DOT), such truck-for-truck trade-ins were less common than expected, as 84 percent of the program participants traded in trucks, but only 41 percent purchased new trucks, which means that more than half of the truck owners traded their vehicles in for a car.

The results are even starker for heavier vehicles, as 8,134 heavy work trucks were traded in, but only 2,408 new heavy work trucks were purchased, and 116,909 large pickups or vans were traded in, but only 46,838 new ones were purchased. The fuel economy of the newly purchased cars was also 19 percent greater than the average fuel economy of all new cars available in the United States.

The CARS program allowed dealers to start providing rebates to customers on July 1, even though the program didn’t officially start until July 24. The billion-dollar program proved so popular that Congress had to quickly approve an additional $2 billion for the program, which was approved by President Obama on Aug. 7.

Despite the extra funding, the funds went quickly, and the DOT announced on Aug. 20 that the program would end on Aug. 24. Dealers had until the evening of Aug. 21 to submit their paperwork, and the results demonstrate that the DOT timed it pretty well, with rebate applications worth $2.877 billion submitted to the agency, leaving only $123 million in rebate funds unaccounted for. The program proved so popular that the DOT changed the rules, allowing people to buy cars even if the dealer was sold out on that model.

According to DOT, the top vehicles traded in under the program include sport utility vehicles, pickups and vans from Ford, Jeep, Dodge and Chevrolet.

The top 10 new vehicles purchased include cars from Toyota Motor Sales, American Honda Motor Co., Hyundai Motor America, Nissan North America and Ford Motor Co., with the Ford Focus and Ford Escape both making the top 10 list. The increased demand caused Ford to boost its production of the two vehicles at its assembly plants in Kansas City, Mo., and Wayne, Mich. Ford experienced year-to-year sales increases in both July and August. Toyota had three vehicles — the Corolla, Camry and Prius hybrid — on the top 10 list, and the company estimates that it accounted for nearly a third of the fuel savings achieved by the program.

Honda saw a near doubling of its sales of the fuel-efficient Fit, and the DOT notes that Honda will increase production at two plants in Ohio and one in Alabama. General Motors Corp. (GM) also experienced gains from the CARS program, attributing it to a 159 percent year-to-year increase in August sales of the Chevrolet Aveo, a 13.8 percent increase in Chevy Cobalt sales, a near doubling in Chevy Equinox sales, and a 26 percent boost in Chevy HHR sales. GM plans to increase production to restock inventories. Chrysler also credited the program with increased sales and has raised its production by 50,000 vehicles.


Reprinted from EERE Network News, a free newsletter from the U.S. Department of Energy.

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Post a comment below.

 

Chad_5
9/16/2009 1:11:41 PM
What a waste. Reduce Reuse Recycle. Amen to less government smoke and mirrors and just less government all together. Boo on them too hasty, not well thought out. Why not spark an revolution of industry and give allowances for converting old engines to more efficient hybrid or alternative fuels. I hear great things about adding flywheels and other alternative modifications. I thought about buying a old used vehicle to convert to electric. Even better they could have donated those vehicles to research at universities and tech centers for improved modifications that could benefit fuel powered vehicles all over the world now and into the future. Anyway. God bless and toast to a smart future.

Pat Haskell
9/15/2009 8:36:01 AM
Clunkers A vehicle at 15 mpg and 12,000 miles per year uses 800 gallons a year of gasoline. A vehicle at 25 mpg and 12,000 miles per year uses 480 gallons a year. So, the average clunker transaction will reduce US gasoline consumption by 320 gallons per year. They claim 700,000 vehicles – so that's 224 million gallons / year. That equates to a bit over 5 million barrels of oil. 5 million barrels of oil is about ¼ of one day's US consumption. And, 5 million barrels of oil costs about $350 million dollars at $75/bbl. So, we all contributed to spending $3 billion to save $350 million. How good a deal was that??? They'll probably do a great job w. health care though!!

Appalachian
9/7/2009 9:45:01 AM
I wish that Mother Earth News were more skeptical of the government line. Cash for Clunkers has destroyed too many useful cars that could be donated or sold cheaply to our marginalized people, for instance the rural poor who frequently have difficulty keeping jobs because of unreliable transportation. Personally it is waste that I hate, and what is more wasteful than Cash for Clunkers?

Kevin_3
9/4/2009 11:32:16 AM
I will not argue that getting cars that get low mpg off the road is a bad thing because it is not. But this cost the taxpayers almost 3 billion dollars not to mention the cost of processing all the paper work and most dealers have not seen any money out of the government as of yet. My bet is sales will go down on cars putting the car companies right back where they started not to mention dealers that may have to wait a while to receive money from the government may be hurt in the long run. This sort of expensive fixes the government is trying will not work in the long run. The best thing they can do is stay out of free enterprise and let things run its course. It will not be easy but in the long run things should right themselves.

Glen Barnes_6
9/4/2009 11:17:22 AM
Out of the 700,000 vehicles trashed how many were good usable vehicles that the 3rd tier owners would have bought? These vehicles could have been bought to replace some REALLY trashy vehicles.I have a 96 van with 220k miles and a 94 car with 265k miles and some of the cars trashed were by far better than either of mine.Neither of mine qualified as they both get 24 mpg or better.The $3000/$5000 vehicle pool just got a lot smaller. What will happen when the people who bought new cars realize they cannot afford them? How will the dealers survive now that the big sales bubble has gone flat? From what I have seen most of the vehicles sold were from bloated inventory. How is that going to help the industry when most dealers will not replace many of the cars in their inventory? All in all I find this program to be just another feel good program that does nothing but spend our tax dollars.








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