Final Tally on "Clunkers"

"Cash for Clunkers" officially ended on Monday evening, so what did Americans buy with nearly $3 billion? Lots of foreign cars.

Here's the final numbers on the program, which cost a total of $2.9 billion (so how long will it be before a political is tauting that it came in "under budget", despite the fact that it actually cost 300% what the initial budget was?), courtesy of the Washington Post. The most interesting thing is that the top 10 models traded in as "clunkers" are all American-made cars, while only two of the top ten models purchased through the program were born in the USA. Those two? The Ford Focus (#4) and the Ford Escape (#10).

Toyota made out the best from the program, accounting for nearly 20 percent of the market during August (compared to just 17 percent from January to July of this year), while Honda saw their market share bump up from 11 percent to 13 percent.

As for gas mileage, the average car traded in got only 15.8 miles per gallon, while the average car purchased gets 24.9 miles per gallon. Even when you consider the fact that new cars always get better mileage (even if they are the exact same model), that increase is higher than I expected.

So if the program was intended to get gas guzzlers off the road (at least a fraction of them), and create insta-demand in the new car market, label this one a success.

However, if you want to look at this in any deeper, more meaningful, and analytic way.....not so fast. Already the car dealerships are concerned about the negative impact there will be on new car sales over the winter and into next year. Not to mention the impact that destroying all those cars will have on the used car market, which is going to see a significant drop in supply.

So 'Cash for Clunkers' might have helped the environment by the tiniest of tiny bits, and temporarily stimulated one sector of the economy, but it may have done so at the expense of both future supply and future demand.

I think Jeremy Anwyl of Edmunds.com, a automotive research group, sums it up well in the Washington Post:

"'Cash for Clunkers' created a nice little blip," he said. "We'll look back and say, 'Nice party, but the hangover is awful.' "