Despite a lot of skepticism from industry analysts, the "Cash for Clunkers" program exceeded just about everyone's expectations. It brought in new customers, cleaned out a lot of old inventory, and started putting auto workers back to work.
A lot of critics, me included, thought this was just a government giveaway that really wouldn't have much effect. And while there's no question it was a giveaway, it did meet the goals of the program: to help reduce America's dependence on oil and stimulate the economy.

Most impressively, dealers tell me that the Clunkers program brought in customers they had never seen before. They were people who would not normally buy a new car. The only reason they came into the showrooms shopping for new cars was because of the cash they could get for their clunkers. And the dealers are pretty sure they'll never see most of them ever again.

John McElroy is host of the TV program "Autoline Detroit" and daily web video "Autoline Daily". Every week he brings his unique insights as an auto industry insider to Autoblog readers.

This is why the auto industry is pretty sure there's not going to be any "payback" now that the Clunkers program is over. Typically car sales crash after a big incentive program, because all it does is sell cars to people who were going to buy one anyway. The incentive just pulls them into the market sooner. But that does not seem to be the case with the Clunkers program. It brought used-car buyers into the new car market.

Every auto job supports another seven to eight jobs elsewhere in the economy.
Moreover, dealers tell me they expect to see a slow but steady stream of customers coming into their showrooms going forward because there's a lot of pent-up demand out there. There are several million customers who could afford to buy a new car right now, and would have no problem getting any financing. But they're unsure about where the economy is headed, and some of them worry about holding unto their jobs. They're not about to plunk their hard-earned savings down on a big-ticket item like a new car. But if the economy starts to pick up, and consumer confidence rebounds, they'll be back in the market right quick.

Automakers also love how the Clunkers program cleaned out so much of their inventory of small cars. Now they're boosting production. GM, Ford, Chrysler, Toyota and Honda are all hiring back autoworkers and even adding some overtime. This is where we could really see the stimulus effect of this program. Every auto job supports another seven to eight jobs elsewhere in the economy.

And there's no question the vehicles that were traded in were far less fuel-efficient than the ones they were replaced with. Most of the clunker trade-ins were old SUVs, pickups and minivans, which were replaced with new compact cars.

Of course, not everything went to plan. There were some glaring snafus with the Clunkers program. The government website that dealers had to use to qualify cars for the Clunkers program was a nightmare to use. It could take up to an hour to enter all the data required to qualify one car, only to see the system crash and have to start all over again. And so far the government has only paid dealers a mere pittance of the money that they're owed. In fact, GM and Chrysler had to provide cash to their dealers just to keep them going until the government reimburses them.

But in terms of boosting car sales, reducing inventory, encouraging fuel efficiency, and stimulating the economy, the Clunkers program pretty much did everything it was supposed to do. All the dealers and car companies I've talked to are surprised and delighted by the results. And I have to confess, so am I.


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