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Did Cash for Clunkers Actually Work? Maybe …

Posted in auto industry, Car Branding, Cash for Clunkers, Newsworthy, People by Alex Kierstein | September 18th, 2009 | 2 Responses |


There’s been a lot of speculation about the effectiveness Cash for Clunkers (C4C) in light of the massively dysfunctional dealer reimbursement scheme, and it seems like that batch of screw-ups threw the entire program into question. Up until this point, the major unanswered question was, did Cash for Clunkers draw “new” buyers, or did it simply help folks who already were going to buy a car? A new survey suggests that the so-called “incremental buyers” who were not thinking about buying a new car before C4C was introduced went out and bought new cars through the program. And not just a couple of them – as many as 30%. Click through for more on what this means.

So here’s how it breaks down exactly. 30% of C4C buyers were not going to buy a new car at all, and only bought one because of the incentives of the program. Also, 37% of all C4C buyers (and that number probably overlaps with the first one, FYI) were planning on only buying a used car, and used C4C as an excuse to buy a new car. In either case, you had buyers purchasing new vehicles who wouldn’t have otherwise, proving that in at least one measure that C4C was a success. And despite all of the negativity on the dealer end of things, 80% of C4C buyers were happy with how the purchasing process through C4C went. The survey was commissioned by Cars.com and was a random sample of more than 1,000 people who bought a car in the last 3 months or were planning on buying a car in the next 6 months (of the latter group, 55% wished C4C would continue so they could use it). What does it all mean? Well we don’t think it means that Cash for Clunkers was an equivocal success, we do think it shows that it worked for at least one narrow measure. Was that enough success to justify the program? We’ll let the pundits argue about that as we go back to drooling over the ICON CJ3B … mmmmm …

Press Release:

Cars.com Survey Shows Cash for Clunkers Drove Incremental Buyers Into Market

Close to a Third of Cash for Clunkers Participants had no Intentions of Buying a Car Prior to the Program Launch

CHICAGO, Sept. 18 /PRNewswire/ — According to a new Cars.com survey, 30 percent of consumers who purchased a new car during the recent Cash for Clunkers program had no intentions of buying a car, but said they bought one because the government program was too good to pass up.

The survey, which focused on consumers who purchased a new or used car in the last three months, also showed that an additional 37 percent of consumers who bought a car in the last several months were originally planning on buying a used car but switched to new to take advantage of the government offering.

“The good news is that the program certainly had its desired effect – it brought consumers into dealerships and moved a lot of new car inventory off dealer lots,” said Cars.com Editor in Chief Patrick Olsen. “Many analysts believed that the program would alleviate pent-up demand by offering incentives to consumers who needed a new car but, for one reason or the other, were holding off until the economy turned around. While that is definitely true, the program clearly was also successful at luring new shoppers into market who otherwise had no intentions of buying a car.”

The Cash for Clunkers program had the largest impact on younger car shoppers with a larger percentage of consumers under the age of 34 stating that they took advantage of the program.

It was well publicized that car dealers were having some trouble processing Cash for Clunkers transactions with the government, but those problems didn’t spill over to consumers. Eight in 10 consumers said they were satisfied with the way the program was run with another 55 percent of consumers wishing that the program could be reinstated.

About the Survey: The survey was conducted for Cars.com by Impulse Research Corp. with an online random sample of 1056 men and women 18 years of age or older who have purchased a new or used vehicle in the past 3 months or are planning to purchase a new or used vehicle in the next 6 months. The overall sampling error rate for this survey is +/-3 percent at the 95 percent level of confidence.

About Cars.com

Cars.com is the leading destination for online car shoppers, offering credible, easy-to-understand information from consumers and experts to help buyers formulate opinions on what to buy, where to buy and how much to pay for a car. With comprehensive pricing information, side-by-side comparison tools, photo galleries, videos, unbiased editorial content and a large selection of new- and used-car inventory, Cars.com puts millions of car buyers in control of their shopping process with the information they need to make confident buying decisions.

Launched in June 1998, Cars.com is a division of Classified Ventures, LLC, which is owned by leading media companies, including Belo (NYSE:BLC) , Gannett Co., Inc. (NYSE:GCI) , The McClatchy Company (NYSE:MNI) , Tribune Company and The Washington Post Company (NYSE:WPO) .

[Source: Cars.com]

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2 Responses

  1. Cash for clunkers encouraged people to take on debt they probably can’t afford, which is how we got into this economic mess in the first place. In addition, it took 700,000 RUNNING cars off the road. As a result, much revenue has been lost be auto repair shops, parts stores, used car dealers and car donation charities.

  2. Dave says:

    Please get a grip. CFC encouraged people to take on debt much the same way sales, low interest rates, and factory incentives do. Did you know there are something like 250,000,000 registered vehicles in the U.S.? That means that approximately 0.2% of all of the cars in the country were replaced by CFC. I currently work for a company that services the automotive aftermarket, which has been booming (for the most part) during this recession. The 700,000 new cars that replaced those clunkers will also be needing parts, tires, batteries, and service in the near future and will actually be more likely to get it, because drivers tend to put off repairs to their “clunkers.” I will be the first to agree that CFC was poorly thought-out and executed and was a farce from both an economic and environmental standpoint, but I can assure you that repair facilities, parts stores, and others will survive just fine without those cars.