Clunkers: The aftermath


The Cash for Clunkers program was nothing if not surprising. It was surprising enough that anything that had to go through Congress had such a brief lifespan. But its success was a surprise as well, and despite problems, some of which still are not entirely resolved, some see it as a model of government action going forward.

Taking the auto dealers perspective, Kelly’s Blue Book called it a very successful program. A key was influencing people who would have been in the used car market to go for a new car instead.

“While the specific details, perceived successes and failures of the CARS 2009 program can be debated at length, the latest Kelley Blue Book Market Intelligence study shows that Cash for Clunkers successfully got consumers in the mind-set to shop for a new car again, despite the economic hardships the country is experiencing,” said Rick Wainschel, senior vice president, market intelligence and brand strategy for Kelley Blue Book and “Manufacturers who placed heavy marketing emphasis and incentives on pushing the Cash for Clunkers program were winners in the end, both in increasing brand consideration in the minds of American car shoppers and likely upping their new-car sales as well.”

The problem with the program mainly came down to fulfillment – car dealers needed fast turnaround and reimbursement on Clunker applications, something the government wasn’t prepared to do, and apparently still can’t despite tripling the number of people working on the task.

But with better planning, who knows?

The popularity was stunning. It quickly ran through a $1B allocation, and dispensed with the $2B second transfusion just as quickly.

Even that may be a problem, according to an article in CQ Politics – nobody knows how much business that would have been transacted anyway was simply displaced  by the program.

But Carl Levin (D-MI) said, “We should celebrate ‘Cash for Clunkers’ as a model of how effective government action can improve our economy and the lives of our citizens, and as a real success story in the use of economic stimulus dollars.” And maybe think about applying it to other product categories.

RBR/TVBR observation: We have already reported on a limited Clunkers program aimed at putting more new energy efficient home appliances into circulation, and helping out another troubled industry, on tap for later this fall. These programs figure to translate into advertising dollars, so we’ll all be keeping our eyes on the horizon to see what similar deals may be in the pipeline.