Cash for Clunkers: Better than we thought

by Peter Valdes-Dapena, senior writer


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. To top of page

Frontline troops push for solar energy
The U.S. Marines are testing renewable energy technologies like solar to reduce costs and casualties associated with fossil fuels. Play
25 Best Places to find rich singles
Looking for Mr. or Ms. Moneybags? Hunt down the perfect mate in these wealthy cities, which are brimming with unattached professionals. More
Fun festivals: Twins to mustard to pirates!
You'll see double in Twinsburg, Ohio, and Ketchup lovers should beware in Middleton, WI. Here's some of the best and strangest town festivals. Play
Find Your Next Car
Index Last Change % Change
Dow 17,959.44 154.64 0.87%
Nasdaq 4,781.42 16.04 0.34%
S&P 500 2,078.54 7.89 0.38%
Treasuries 2.16 -0.01 -0.64%
Data as of 5:24pm ET
Company Price Change % Change
Gilead Sciences Inc 92.90 -15.55 -14.34%
Bank of America Corp... 17.71 0.09 0.51%
Apple Inc 112.94 1.16 1.04%
General Electric Co 25.71 0.09 0.35%
Facebook Inc 81.45 1.57 1.97%
Data as of 4:00pm ET

Sections

Private equity titan CEO David Rubenstein drops some rhymes in a holiday message to investors. More

Sure you could spend more this holiday, but your better bet is to put the money you save in your 401(k). More

Unilever sued Hampton Creek over its egg-free mayonnaise spread Just Mayo. But the company behind Best Foods and Hellman's mayonnaise has now dropped the lawsuit. More

Retired union workers could see their pensions cut under a controversial new law, but many say they're not sure how they'll make ends meet if big cuts go through. More

Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer.

Morningstar: © 2014 Morningstar, Inc. All Rights Reserved.

Factset: FactSet Research Systems Inc. 2014. All rights reserved.

Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved.

Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor’s Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2014 and/or its affiliates.