Now that the cash-for-clunkers bill is ready for the President's signature, attention is turning to how much of an impact the negotiated bill will actually have on car sales. There are a lot of positive stories about the bill floating around - headlines say the bill might "jumpstart US auto sales" and claim "Has Uncle Sam got a deal for you." But will the law, with its fairly tight requirements, really stimulate sales? Some auto analysts don't think so.

Four analysts interviewed by Automotive News (subs req'd) estimate that only 70,000 to 200,000 more vehicles will be sold because of the clunkers bill. There are three main factors limiting the bill's impact:

  • It's just four months long. The law will only offer the cash for your clunkers from the first of July until November 1
  • While the bill requires the new vehicle to be more fuel efficient than the one you're trading in, the 18 mpg limit on the old ride (details here) doesn't encompass nearly enough vehicles.
  • The economics of the law don't make a lot of sense in the real world. If you're driving an eligible car, then chances are that you can't afford a new vehicle right now - even if you can subtract $4,500 from the price. More often than not, it makes more sense to just buy a used car.
[Source: Automotive News]
Photo by KB35. Licensed under Creative Commons license 2.0.

Share This Photo X