CARS set out to kill two birds with one stone: jumpstart slow automobile sales and get a large number of older cars off the road.

A lot has happened since 2009. President Obama was re-elected. The Arab Spring saw popular uprisings overthrow dictators across the Middle East and North Africa. General Motors declared and subsequently emerged from bankruptcy. Fiat bought Chrysler. And the Cash for Clunkers program came and went.

That's right, it's been five years since the federal government launched the Car Allowance Rebate System – known as CARS for short, or more popularly as Cash for Clunkers. The program set out to kill two birds with one proverbial stone: jumpstart slow automobile sales across the country on the one hand, and get a large number of older (and less environmentally friendly) cars off the road. Identifying both problems and a single way to solve them, the government offered financial incentives (cash) for drivers to trade-in their old cars (clunkers) in favor of new ones, following the lead set by similar scrappage programs that had taken place in other countries around the world.

Even with a moribund economy, buyers jumped at the opportunity, and in less than a month, the entire $1 billion allotted by Congress to the program had been used up. So legislators approved an additional $2 billion, which ran out before the end of August 2009 – two months ahead of schedule.

The question that lingers five years later is whether the program was actually a success. Proponents point to the rapid rate at which customers took advantage of the program as a sign of its success, providing a boost in sales to automakers and dealers across the country. The Department of Transportation also reported that the new vehicles acquired averaged over 60-percent better fuel economy than the ones that were traded in, all the while giving a shot of adrenaline to Detroit's automakers.

Critics, however, debate the veracity of those claims and paint a different picture. The program's detractors claim that the increased sales promoted by the program were not created out of nowhere, they merely pulled ahead future sales that would've taken place anyhow, resulting in a zero net gain at the cost of $3 billion to the taxpayer. Implementing the program also required the National Highway Traffic Safety Administration to take on thousands of additional employees to process the applications for reimbursement and necessitated the government setting up the National Motor Vehicle Title Information System just to keep track of it all.

Meanwhile, detractors point out, it was not American automakers but Japanese ones like Toyota, Honda and Nissan that brought in the lion's share of new car sales from the program (while American cars were ineligible under Japan's own scrappage program). The initiative is also said to have had the unfortunate side-effect of raising prices on used cars (which only made things harder on those who couldn't afford new ones during difficult financial times), and reduced the number of old cars being donated to charities that depended on them.

As for the improvement in fuel economy, critics claim that drivers are likely to drive their newly fuel-efficient cars more (canceling out any environmental benefit of their improved economy), also arguing that the environmental impact of manufacturing and shipping the new cars bought hadn't been taken into account. Further, they note that many large SUVs and crossovers qualified for the program even though they didn't meet the 20-mpg threshold for eligibility.

Whether the program, now five years in hindsight, could ultimately be viewed as a success or not, one thing's for sure: it was certainly expensive.



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  • 77 Comments
      bootsnchaps60
      • 4 Months Ago
      It propped up a flagging new auto sales market but hurt the folks on a budget who could have used the older cars for basic transportation as used car prices went up (and are still up). It cut the supply of used engines. It was a feel good plan with little long term benefit; symbolism over substance.
      thecommentator2013
      • 4 Months Ago
      It's never about the environment.
        EVnerdGene
        • 4 Months Ago
        @thecommentator2013
        "It's never about the environment." - - - You've got that right ! - - - Keystone pipeline. - - - Trying to murder our coal industry (while China and India build a new coal-powered plant at a rate of about one per week). - - - Ruling that CO2 is a pollutant (necessary for all plant life on Earth - therefore all animal life also). - - - very confused Idiotocracy
      Car Guy
      • 4 Months Ago
      CARS cost the taxpayers nearly $5 billion. It was little more than corporate welfare for the auto industry. In hindsight that money should have been spent on our infrastructure.
        Sanchez
        • 4 Months Ago
        @Car Guy
        Or it could have gone back to its rightful owners, the taxpayers.
      Charles
      • 4 Months Ago
      One industry that was hurt was the parts recycling business(junk yards).Yes a lot of metal got recycled but that did not help the people who depend on cheaper parts or the people employed by the industry.
        Zoom
        • 4 Months Ago
        @Charles
        So maybe there were fewer Expedition parts available that made it harder to keep other Expeditions on the road. To me, that sounds like a two-fer. Or maybe three-few. I have no problems with that.
      Sebastian James
      • 4 Months Ago
      Based on auto sales since 2009, I believe it can be said that CfC didn't cannibalize future demand. In fact we have seen increasing sales domestic and international ever since. At worst it helped provide a firm floor for demand. At best it kept the Big 3, and more importantly the companies up and down their supply and sales chains in business.
      BipDBo
      • 4 Months Ago
      CFC was a monumentally stupid idea from inception. In practice, it proved to be just as much of a failure. The math is incontrovertible. Reference the innumerable write-ups comparing it's costs verses its benefits. It's only successes were political, to send out gifts to the people in a shameful, thinly veiled attempt to literally buy votes.
        jimmy_james44
        • 4 Months Ago
        @BipDBo
        If these were old clunkers, then there's also a air quality benefit that's hard to calculate, but all the new cars bought would be clearly cleaner burning then their replacements.
      jimmy_james44
      • 4 Months Ago
      " critics claim that drivers are likely to drive their newly fuel-efficient cars more (canceling out any environmental benefit of their improved economy)" - Simplistic analysis is always wrong. Also not backed up by any scientific study, is a clear BS indicator. The missing variable is TIME, you don't get more time when you buy a hybrid.
        scraejtp
        • 4 Months Ago
        @jimmy_james44
        Not trying to contradict your argument, but actually many people did gain time from buying a hybrid. Many areas (Notably southern California) allowed use of the HOV lanes with single occupancy by hybrid vehicles at the time. This could save quite a bit of time, and allow for more driving. But I think the answer is obvious that this is not the case. The fleet MPG for the US keeps going up, but miles driven down.
        Larry Litmanen
        • 4 Months Ago
        @jimmy_james44
        I agree with your point, if i had a more efficient car i would drive more. But at a certain point i would reach a limit how much i will be driving vs. doing other things i usually do.
          GoodCheer
          • 4 Months Ago
          @Larry Litmanen
          "if i had a more efficient car i would drive more" I've never understood this argument. It's not like I drive as much as I can afford to. Does anyone actually get their paycheck and say, 'man, I'm totally gonna burn through 4 tanks of gas with this money!'?
      jesscott
      • 4 Months Ago
      "Implementing the program also required the National Highway Traffic Safety Administration to take on thousands of additional employees to process the applications for reimbursement and necessitated the government setting up the National Motor Vehicle Title Information System just to keep track of it all" There's what the program was all about........growing government and letting them invade more of our personal lives and decisions. Whoopee!
      pghcc2006
      • 4 Months Ago
      Free money is popular...imagine that. It was a worthless ineffective band-aid like most of the supposed solutions to america'sAmerica's economic crisis were. Just a tempory halt on the timer on the personal, corporate and government debt bomb that we've all been sitting on since that idiot LBJ decided to fight poverty and communism and failed miserably at both
      mylexicon
      • 4 Months Ago
      Silly give away of funds. Better programs with more targeted methods could have raised fuel economy and new car sales without causing shortage in the used market.
      TrueDat
      • 4 Months Ago
      cash for clunkers did one thing.. gave more money to banks via the consumer, seeing that 99% of the new cars were financed. this wasn't quite as obvious as the bank bailout, but was certainly just another way for mr obama to pay of his friend, mr goldman sachs.
        Sanchez
        • 4 Months Ago
        @TrueDat
        It moved money more quickly to banks. The sales hangover in the months after the program prove that it really just pulled some sales ahead at the expense of a great many taxpayer dollars and some perfectly usable resources (cars).
        Peter Middleton
        • 4 Months Ago
        @TrueDat
        Hey hey hey........ The car companies made money too not just the banks ;)
      PatrickH
      • 4 Months Ago
      A majority of the people that traded in their old cars for new ones under this program were not in a financial position to purchase a new car. This was an economic meddling program that shouldn't have taken place. Being that it did, it should have applied ONLY to cars made within the US.
        Zoom
        • 4 Months Ago
        @PatrickH
        "A majority of the people". How do you know? did you review their transactions. I love busybodies!
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