AboutThatCarBlog.com

Cash for Clunkers is a phrase that translates into incentives which were roundly criticized when automakers used them to spur sales. Something about pulling people into the market early and doing away with brand loyalty were mentioned.

But given the dire condition of the U.S. auto market, nary a peep has been heard about the long term impact of incentives, or cash for clunkers. And the downside was not mentioned when the National Automobile Dealers Association asked the government to suspend the cash-for-clunkers program because a survey by the group found that the $3 billion fund has been exhausted.

While the Cash for Clunkers program is coming to an end manufacturers and dealers are concerned that their business will return to pre-clunker levels. To address this concern, some of the leading U.S. Automotive Retailers are participating in a privately funded stimulus program to help consumers who were left behind by the government’s plan.

Due to the restrictions of the government’s program, over 90% of consumers were not eligible. As a result, some of the largest retailers in the country are promoting a new dealer funded stimulus program that gives consumers up to $4500 of additional trade-in value towards the purchase of a new or used vehicle.

See Program details at www.AutoStimulusPlan.com.

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We’ve been hearing about cash for clunkers for months. It’s the government program designed to get old gas guzzling cars off the road by offering cash to consumers to buy more fuel efficient cars.

The deal has two goals wrapped in one action. It gets drivers into potential more fuel efficient cars and it jump starts car sales. But contrary to the catchy title, consumers will not be given cash to buy newer vehicles.

Dealers will register for the program. When a consumer trades a gas guzzler and purchases a more fuel efficient vehicle and government credit is applied to the purchase of the new vehicle.

That credit will be $3,500 for fuel efficiency that is four miles per gallon better than the traded in car. It jumps to $4,500 if the purchased car is 10 mpg better. For light trucks its $3,500 for 2 mpg better and $4,500 for 5 mpg better.

Frank S. Washington

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In the face of plummeting sales the average incentive, or the money automakers put on the hood to move the metal out the door, is at record levels.

Edmunds.com, an online resource for automotive information, estimated that the average automotive manufacturer incentive in the U.S. was $2,914 per vehicle sold in February 2009, up $216, or 8.0 percent, from January 2009, and up $400, or 15.9 percent, from February 2008.

According to Edmunds.com, combined incentives spending for domestic manufacturers averaged $3,991 per vehicle sold in February 2009, up from $3,518 in January 2009. From January 2009 to February 2009, European automakers increased incentives spending by $67 to $3,150 per vehicle sold; Japanese automakers decreased incentives spending by $77 to $1,698 per vehicle sold; and Korean automakers increased incentives spending by $102 to $3,031 per vehicle sold.

“The last time sales were at this level was in the early 1980s, when the country had 25 percent fewer licensed drivers,” stated Jesse Toprak, Executive Director of Industry Analysis for Edmunds.com. “Back then, you could practically buy a new car for the amount that some of today’s automakers are spending on per-vehicle incentives.”

Among vehicle segments, premium sport cars had the highest average incentives, $6,331 per vehicle sold, followed by luxury SUVs at $4,329. Subcompact cars had the lowest average incentives per vehicle sold, $762, followed by compact cars at $1,578.

Now is not a bad time to buy a car or truck.

Popularity: 4% [?]