By James Limbach
ConsumerAffairs.com
August 26, 2009
The Car Allowance Rebate System (CARS) program, better known as "Cash for Clunkers" came to a close Tuesday night with nearly 700,000 gas guzzlers taken off the roads, replaced by far more fuel efficient vehicles, according to the Department of Transportation.
Rebate applications worth $2.877 billion were submitted by the 8 p.m. deadline, under the $3 billion provided by Congress to run the program, the government said, with cars made in America topping the most-purchased list, from the Ford Focus to the Toyota Corolla to the Honda Civic.
"American consumers and workers were the clear winners thanks to the cash for clunkers program," said U.S. Transportation Secretary Ray LaHood. "Manufacturing plants have added shifts and recalled workers. Moribund showrooms were brought back to life and consumers bought fuel efficient cars that will save them money and improve the environment."
According to a preliminary analysis by the White House Council of Economic Advisers, the CARS program will:
• Boost economic growth in the third quarter of 2009 by 0.3-0.4 percentage points at an annual rate thanks to increased auto sales in July and August.
• Sustain the increase in GDP in the fourth quarter because of increased auto production to replace depleted inventories.
• Create or save 42,000 jobs in the second half of 2009. Those jobs are expected to remain well after the program's close.
Ford and General Motors recently announced production increases for both the third and fourth quarters as a result of the demand generated by the program. Honda also said it will be increasing production at its U.S. plants in East Liberty and Marysville, Ohio and in Lincoln, Alabama.
In addition, the program provides good news for the environment. Eighty-four percent of consumers traded in trucks and 59 percent purchased passenger cars. The average fuel economy of the vehicles traded in was 15.8 miles per gallon and the average fuel economy of vehicles purchased is 24.9 mpg -- a 58 percent improvement.
"This is a win for the economy, a win for the environment and a win for American consumers," said LaHood.
With the end of transactions under the program, the Department of Transportation is augmenting a team that already includes more than 2,000 people processing dealer applications for rebates.
Under the CARS program, dealers submitted 690,114 transactions valued at nearly $2.9 million, according to Transportation Department figures as of Aug. 26. The top new vehicles purchased were the Toyota Corolla, Honda Civic, Toyota Camry, Ford Focus FWD and the Hyundai Elantra. Toyota accounted for 19.4 percent of the new vehicles sold, followed by General Motors at 17.6 percent and Ford at 14.4 percent.
The top trade-in vehicles included the Ford Explorer 4WD, Ford F150 Pickup 2WD and the Jeep Grand Cherokee 4WD. Eighty-four percent of the trade-ins under the program were trucks, while 59 percent of new vehicles purchased were cars. Officials say the program worked far better than anyone anticipated at moving consumers out of old, dirty trucks and SUVs and into new more fuel-efficient cars.
