Cash for Clunkers: Better than we thought

NEW YORK (CNNMoney.com) -- The government's Cash for Clunkers program resulted in a far bigger boost to car sales than was previously estimated, even by the government, according to a new analysis by Maritz Research, an automotive market research company.

Maritz estimates that a total of 765,000 new vehicles were sold because of the program. Those cars wouldn't have rolled off dealer lots without the offer, they say.

That's more than double the Department of Transportation's estimate of 346,000 sales that wouldn't otherwise have been made.

Maritz' estimate of additional new car sales resulting from the program is actually even larger than the total number of vehicles sold under Cash for Clunkers.

Government records indicate that a total of 677,000 new vehicles were purchased under the program.

According to Maritz, 542,000 of those sales were made to people who didn't plan to buy a car otherwise. Additionally, another 223,000 people were lured into dealerships by the program, learned they didn't qualify for the benefit, but purchased a car anyway.

"The results provide strong empirical evidence that CARS did not impede future sales," said Maritz vice-president David Fish, in an announcement. "Vehicles were sold to people who don't normally buy them."

Sales statistics since the Clunkers program ended also indicate that the program didn't "steal" sales from future months, Maritz said in its announcement.

Maritz surveyed 36,000 people who bought a new car or truck from July to August, 2009, the period when Cash for Clunkers was available.

Previous estimates for sales that wouldn't have been made but for the Cash for Clunkers program were as low as just 125,000, a figure arrived at by the automotive Web site Edmunds.com.

Edmunds.com's estimate was based on an analysis of sales figures, not on survey results. That's a key difference, said Jeremy Anwyl, chief executive of Edmunds.com.

Car companies ordinarily have big rebate incentive programs in the summer, Anwyl said, but they didn't have to last summer because of Cash for Clunkers. All the government did was substitute its rebates for bigger rebates from carmakers.

"A correct question would have been would they have bought the car if General Motors had offered a similar rebate?" he said.

Furthermore, the 764,000 sales figure would be about 7.7% of all auto sales made last year, a figure Anwyl called unrealistic.

The Cash for Clunkers program gave car buyers rebates of up to $4,500 if they traded in less fuel-efficient vehicles for new vehicles that met certain fuel economy requirements. A total of $3 billion was allotted by Congress for those rebates.

Buyers under the program also tended to be long-term car owners, the survey found. Nearly 80% traded in cars with more than 100,000 miles on them and half the trade-ins were more than 10 years old. Also, more than 60 percent say they plan to keep the new car they just bought as long as possible. Ordinarily, only 38% of new car buyers plan to keep their car long term.