Maritz: 'Cash For Clunkers' Worked Just Fine


The government's Cash for Clunkers, last summer's government-backed incentive program to spur the auto business and get people into more fuel-efficient vehicles, got lukewarm reviews from a number of auto industry pundits. And many observers have argued that far fewer of the vehicles sold under the program would not have been sold anyway, and that the program did more harm than good by damaging future sales and helping to slow recovery.

But a new study by Toledo, Ohio-based Maritz Research says the Car Allowance Rebate System (CARS) actually worked just fine at generating incremental sales with no detrimental affect on future new auto volume, and even left out enough viable consumers that it could be repeated.

The study, derived from Maritz's year-round New Vehicle Customer Study and based on surveys of some 36,000 consumers who bought a new car or truck under the program (July and August last year), says CARS generated 542,000 new car or truck sales. That's way above previous estimates of between 125,000 and 346,000 incremental new vehicle sales.



Said Dave Fish, VP, Maritz Automotive Research Group, in a statement: "Our findings ... largely debunk the myth that Cash for Clunkers mortgaged future car and truck sales. In fact, the program resulted in sales of vehicles to people who don't normally buy them." The firm's survey found that among all new-vehicle sales during the CARS period, only 4% of buyers in the CARS program would have still purchased or leased a vehicle without the extra incentive. And, per Maritz, 31% acquired a new car through the incentive program specifically because of the CARS offer, while about half who bought new cars during the period did not participate in the program and never intended to. The firm says that sales of 223,000 new vehicles sold were not under CARS, but that CARS brought them into showrooms and, therefore, drove the sale. Citing the U.S. Department of Commerce's Bureau of Economic Analysis, Maritz says proof that CARS did not steal future sales is evident in the fact that sales were at a higher pace after the program ended.

The survey also says CARS consumers were different from typical new-car buyers in that more of them (58%) were trading in cars they had bought used; more of them (16% versus around 13% for non-CARS) were first-time car buyers; vastly more (80%) were trading in vehicles with over 100,000 miles on them; and half were trading in cars over 10 years old.

"These results provide strong empirical evidence that CARS did not impede future sales. Vehicles were sold to people who don't normally buy them," said Fish. Maritz says the data suggests such programs could work again because 13% of consumers (female, younger, unmarried with lower household incomes) wanted to participate but could not because they misunderstood the criteria and Gen X and Millennials more often than others fell into that same category.

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