• by Karl Greenberg , June 25, 2009

With the launch of a new program, Ford is counting on a healthy dose of consumer confusion about the federal Consumer Assistance to Recycle and Save (CARS) program, more colloquially known as "Cash for Clunkers."

The company's "Recycle Your Ride" features a calculator at www.Ford.com to help consumers figure out how much the government would give them to trade in for a new Ford vehicle. CARS offers financial incentives up to $4,500 to owners of older vehicles to upgrade to newer, fuel-efficient ones.

The "Interactive Calculator" also can figure the fuel economy of one's current vehicle and determine the amount of voucher funds that can be applied toward qualifying Ford, Lincoln or Mercury vehicles, per Ford.

Hoping to generate showroom traffic for trade-ins through its own program, Ford says it has 20 vehicles across its Ford, Lincoln and Mercury lineup that meet trade-in requirements for CARS.

Jeff Schuster, executive director of global forecasting and product analysis at J.D. Power & Associates, calls Ford's program a good marketing move because it exploits a serious clarity issue with the CARS program.

"I think that's going to be one of the challenges," he tells Marketing Daily. "The program has multiple layers for consumers to figure out such things as whether one's vehicle even qualifies. I think, all in all, it is going to be extremely confusing for consumers."

In looking into Cars.gov to see how the federal government fields questions about the program, Schuster finds, that "to some of the 'frequently asked questions,' the answers themselves were confusing, so it's going to be a difficult program when it comes to sitting in your living room and figuring out if you qualify."

He adds that consumers are constitutionally averse to venturing into their local dealerships to get tutoring. "When you venture into a dealership or store and someone asks whether you need help, you are likely to say, 'No, I'm just looking.' Consumers won't do it unless they are ready to make a deal."

Still, based on J.D. Power's half-month dipstick of U.S. auto sales, things are looking up. The firm says that through the first 17 days of this month sales have improved 14% versus last month, and sales for May are only down 9% versus May last year -- a big improvement over double-digit declines year over year in previous months.

While the firm says CARS could increase 2009 sales by as much as half a million units, it says funding limitations and the duration of the program -- between July and the beginning of November this year -- will limit its potency as an economic steroid.

Says Schuster: "The program is limited in its term, and it has these multi-layered restrictions on what qualifies. At the end, if your vehicle is worth more than the cash you get, it doesn't make sense to do the program, since you won't get trade-in value or resale."

The "Cash for Clunkers" program was a big success in Germany, where it has been running for months. But Schuster says it's unlikely to be a big hit here because it's a "lite" version of the European program.

"That was a hugely successful program; there was more pent-up demand there, and the German consumer isn't conditioned to incentives. And we already have a robust level of incentives."