Cash for Clunkers

This wildly successful Cash for Clunkers program has already proven to be a win for the economy, a win for energy independence and an overwhelming win for consumers.

Details of the Car Allowance Rebate System (CARS) program
Text of the Cash for Clunkers bill as passed by the House of Representatives

Cash for Clunkers Facts:

According to reports on the more than 200,000 Cash for Clunkers purchases thus far:

• The average fuel economy of new vehicles purchased under the program is 25.4 mpg, and the average fuel economy of trade-ins is 15.8 mpg. The average increase in fuel economy is 9.6 MPG, or a 61% improvement. This will result in annual consumer savings of $700-$1000 in gas prices.
• 83% of trade-ins under the program are trucks, and 59% of new vehicle purchases are cars. Cars purchased under the program are, on average, 21% above the average fuel economy of all new cars currently available, and 63% above the average fuel economy of cars that were traded in.
• In July, Ford’s hybrid vehicles (Fusion, Milan, Escape and Mariner) posted combined sales of 5,353, a record for any month and up 323% versus a year ago.
• During the week that the ‘Cash for Clunkers’ program was launched, GM’s small car sales increased 54.8% over the preceding week.  GM Compact car sales were up 36.9% during the same period.  Specifically, the Chevy Aveo – one of GM’s most fuel-efficient vehicles at 30 mpg (EPA) – saw a sales increase of 58.9% during the week that the CARS program was launched.

The economic up-side doesn’t end in the auto industry:

• Companies that produce sodium silicate, the substance used to ‘kill’ the clunkers, are experiencing record sales.
• Sirius XM stock value has experienced a surge because its units are getting installed in the new vehicles
• Some economists see more major impacts: "The blowout response to the cash-for-clunkers incentive program has been far stronger than we expected," wrote Morgan Stanley economist Richard Berner in a note Monday. He now thinks GDP will grow 3% to 4%, up from his firm's earlier forecast of 1%.”
• Steel demand is beginning to pick up again after eight months and should benefit from the "Cash for Clunkers" auto rebate program, the chief executive of steelmaker Nucor Corp (NUE.N) said on Wednesday.

Clunker Success Proves Clean Energy Legislation Is a Win for Consumers and the Economy

The Huffington Post | July 31, 2009 | By Rep. Ed Markey

Generally it's a sports car that turns heads on the highway. This week it was all those jalopies headed to the dealership.

The overwhelming success of the Cash for Clunkers program, which provides rebates for those who want to upgrade to more fuel efficient, new vehicles, shows Democratic Congressional action on clean energy is good for the economy, energy independence and consumers.

Today we voted to extend the Cash for Clunkers program with $2 billion in additional funding. And I spoke on the House floor with my colleagues to ensure that these funds will not be permanently drawn away from other important clean energy initiatives.

Here in Congress, creating a successful program usually takes a while to get up to speed, but the Cash for Clunkers program is like a race car that went from zero to 60 in three seconds -- showing the pent-up demand for more fuel efficient vehicles is huge.

This program -- the first part of the Waxman-Markey Bill to become law -- has exceeded even the highest expectations. Consumers are trading in old gas guzzlers, large SUVs and pickup trucks for new vehicles that are 69 percent more fuel efficient than their clunker, saving $750 a year on gasoline on average. That means less carbon pollution and less foreign oil from the Middle East.

By empowering consumers, the program is racing past our expectations for fuel economy improvement. Here are just a few of the early returns:

• Roughly two thirds of deals have resulted in consumers receiving $4500 credit, which applied to only the most fuel efficient trades.
• During the week that the 'Cash for Clunkers' program was launched, GM's small car sales increased 54.8 percent over the preceding week.
• Toyota moved 78 percent of their Cash for Clunkers volume on vehicles that together average 30 mpg, and 39 percent of volume on the Corolla and Prius, which together average 39.5 mpg.
• Ford has seen an average of 7 mpg improvement on Clunkers trades, which represents an estimated annual fuel savings of 228 gallons per customer. The 28 mpg (EPA) Ford Focus is nearly 30 percent of all Ford's Clunker sales.
• Mazda, as of yesterday, saw 57 percent of transactions reported by dealers to be for the purchase of the MAZDA3, the brand's most fuel efficient model at 27 mpg (EPA).

With Clunkers in the win column, now is the time to move on other provisions in the Waxman-Markey Clean Energy Jobs legislation that will stimulate other areas of the economy. The steel industry will see a bump from wind turbine construction. Manufacturing workers will be needed back on the line for solar production. And contractors will be put back on the clock making efficiency retrofits for building and homes. As Clunkers demonstrates, smart energy policy is what the U.S. economy needs to get back on its feet.

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