Today’s White House blog post documents the revival and resurgence of the American auto industry that was once believed to be on the verge of extinction. The whole story is explained in the following three simple gifs.
Image courtesy: Whitehouse.gov
Image Courtesy: Whitehouse.gov
Image Courtesy: Whitehouse.gov
(Sources contributing to this hybrid report: Green Car Congress; Fast Lane – Sec. LaHood’s Blog; Autoblog; Detroit News; LA Times; Business Week)
Finally, the curtains came down on the Cash For Clunkers program on Monday @8PM. After much hype and chaos the program closed its doors with a mixed record. Secretary LaHood calls is a great success while some others say no pointing to the choas around the program’s final days when the computer systems crashed as the dealers tried to submit their transcation data for reimbursements. In anycase, the program has left a wonderful memory in the minds of many economists and possibly underlined the fact that indeed the Government has some clever tricks up the sleeves to stimulate a lagging economy, especially for the automakers whose future looked very gloomy before this program came in to place.
After one month, an extra $2 billion in funding and an absolute mess of paperwork, Cash for Clunkers has finally petered out. The final numbers are in and the program resulted in 700,000 sales totaling $2.877 billion in $3,500 and $4,500 vouchers handed out at dealerships across the nation. An additional $100 million was set aside for administration costs, or about $144 for every claim processed, leaving $23 million in the kitty.
The program offered consumers rebates of $3,500 or $4,500 off the price of a new vehicle in return for trading in their older, less fuel-efficient vehicles to be scrapped. The trade-in vehicles needed to get 18 miles per gallon or less.
Here are some interesting snippets collected from various sources around the web (thank me for making it easy for you).
Image Courtesy: Green Car Congress
Green Car Congress notes that Toyota reaped the largest percentage of sales under the CARS program (19.4%), followed by GM (17.6%) and Ford (14.4%). Honda came in fourth at 13.0%.
The top 10 vehicles purchased under the program were:
Top 10 Trade-in Vehicles:
David Kiley at Business Week says that the annualized selling rate for the auto industry in August is expected to be about 15.5 million, thanks to C4C, according to Wall Street firm Goldman Sachs. That would be a 16% improvement year over year, and nearly a 40% increase from July. Goldman fully expects a “pay back effect” in September following the program. The firm also expects the monthly selling rate to remain above 10 million for the rest of the year, with a final sales tally of about 10.5 million, with a tally of 12 million next year. Some other analysts have pegged next year’s selling rate at 12.5 million to 13 million.
David also observed that while the program did its job, its real contribution has been less than the hype. Cash for clunkers did spur sales. It sold 690,000 cars and many were compacts like the Ford Focus and Honda Civic. So it did accomplish the mission of scrapping some old iron and selling some more efficient cars. That said, the boost will amount to less than a 3% increase for the year. That’s hardly the windfall that Germany achieved from a similar program, which pushed sales up an average of 30% a month since March. There may also be a hangover in car sales in the U.S. Edmunds says that purchase intent is now down 11% from June, meaning that fewer people are looking at new cars. So sales could slump in the coming months. In fact, J.D. Power says that more than 70% of sales may have happened later this year even if the government hadn’t spent $3 billion on the clunker program. One other point: Toyota was the biggest beneficiary, getting 19.4% of sales, with General Motors getting 17.6% and Ford getting 14.4% of sales from the program.
David Kiley says that “Clunkers” was good policy for a number of reasons (all of which I agree wholeheartedly):
The USDOT’s press realease observed that according to a preliminary analysis by the White House Council of Economic Advisers, the CARS program will (1) Boost economic growth in the third quarter of 2009 by 0.3-0.4 percentage points at an annual rate thanks to increased auto sales in July and August. (2) Will sustain the increase in GDP in the fourth quarter because of increased auto production to replace depleted inventories. (3) Will create or save 42,000 jobs in the second half of 2009. Those jobs are expected to remain well after the program’s close.
Sec. LaHood says “This is a win for the economy, a win for the environment and a win for American consumers”. He noted in his blog “CARS’ economic success has been some of the most heartening news. Both Ford and General Motors haveannounced production increases for their third and fourth quarters due to heightened demand for fuel-efficient vehicles. Honda is also increasing production at its U.S. plants in East Liberty and Marysville, Ohio and in Lincoln, Alabama. The program has been a lifeline to auto manufacturers and dealers to be sure. But it’s also had a visible ripple effect through communities and related industries. Because of CARS, scrapyards are selling clunker waterpumps, batteries and other parts. Credit unions and banks are processing thousands of car loans. Repairmen, mechanics and sales staff are picking up additional work. CARS has truly been a winning deal for everyone. ” The USDOT’s press release also offered the following statistics:
Vehicles Purchased by Category
Vehicle Trade-in by Category
84% of trade-ins under the program are trucks, and 59% of new vehicles purchased are cars. The program worked far better than anyone anticipated at moving consumers out of old, dirty trucks and SUVs and into new more fuel-efficient cars.
Average Fuel Economy
Cars purchased under the program are, on average, 19% above the average fuel economy of all new cars currently available, and 59% above the average fuel economy of cars that were traded in. This means the program raised the average fuel economy of the fleet, while getting the dirtiest and most polluting vehicles off the road.
Image Courtesy: Green Car Congress
Industry experts are now saying that after the ‘party’ of the Cash for Clunkers scheme, the auto industry will now experience a ‘hangover’, with a large drop in sales due to the lack of incentives. Auto research firm Edmunds.com predicted Wednesday that the industry “is likely to experience a painful hangover” after the monthlong cash-for-clunkers party. “People rushed into purchases that many would otherwise have made later this year. The result will be lower sales in the weeks to come,” said Edmunds Chief Executive Jeremy Anwyl. The number of people who intend to buy a new car in the next two months was down 50% from the peak of the clunkers program and 11% from the average in June, the firm said.
Figures released Wednesday showed that California auto dealers requested the most in reimbursements, $326.8 million, followed by those in Texas, New York and Illinois. Timely payment to dealers, some of whom are owed more than $3 million, will be a key measure of the program’s effectiveness, industry spokesman Wood said. Michigan ended up with $132.4 million in vouchers sought under the cash for clunkers program, the eighth highest among states. California was first at $327 million followed by Texas, New York, Florida Illinois, Pennsylvania and Ohio.
Contributing Sources: CNN Money; Jalopnik ; LA Times & Autoblog Green)
Finito! Finished! Over! Gone! Done! End of the Road! Swan Song! Whatever the buzz word you would like to use for marking the end of the “successful” Cash for Clunkers Program, please feel free to do so. Many buyers made it out of the dealers with a sigh of relief while many dealers are still left wringing their hands over the delays in the Government’s administrative machine that processes the vouchers.
Amdist all this madness and hype surrounding the C4C, for many of us in the transportation business might take a couple of days (or even weeks) to understand the full impact of the program’s final days. Hopefully it is all good. In the meanwhile, TransportGooru went looking for the statistics on how the programs as well as the vehicles tallied up so far and found it for you from the reliable sources in our Automotive web reporting sphere (including Autoblog, Jalopnik, etc).
The ever popular Website, Jalopnik reports that as of Friday morning the number of transactions submitted numbered 489,269 with a dollar value of $2.04 billion. This morning the number reached 635,186 transactions with a dollar value of $2.65 million. So far (as of 7:47 AM August 24, 2009) the number of vehicles purchased have overwhelmingly been passenger cars (283,104) and category 1 trucks (166,686), with just a few category 2 (31,862) and category 3 (1,300) trucks. On the other end, the majority of vehicles turned in are category 1 trucks (318,249) and category 2 trucks (81,599) with just 78,265 passenger cars. Was there a surge of sales over the weekend? How successful has the program been? Once the deadline has passed, it’ll be interesting to see where the final MPG improvements and rankings of purchased and clunked cars end up. Shouldn’t have to wait long.
It would be hard to have a popular program without any drama, right? The New York Times reports that auto dealers swimming in applications for the “Cash for Clunkers” program now have a little extra time to fill out those forms. The Web site that dealers use to submit rebate applications crashed this afternoon, the Department of Transportation said. As a result, dealers can file for rebates until noon on Tuesday, though the deadline for sales is still 8 p.m. Monday. Car shoppers flooded sales lots this weekend after the announcement Thursday that the program was ending.
The Transportation Department said that despite a large increase in the system’s capacity, the website was down temporarily Monday. By then, dealers had submitted 625,000 applications worth more than $2.5 billion.
The department’s website, which has had problems throughout the program’s short life, was down for at least six hours Monday amid a last-minute rush to submit rebate applications, said Bailey Wood, a spokesman for the National Automobile Dealers Assn.
Glitches aside, Transportation Secretary Ray LaHood spent Monday taking a victory lap. “This program has been a lifeline to dealers,” Mr. LaHood said in Norristown, Pa. “It’s been a lifeline to the scrapyards who are getting these cars and can sell water pumps, and batteries and other parts. It’s also been a lifeline to the credit unions and banks processing all these loans. It’s been a win-win-win all around.”
AutoNation (AN, Fortune 500), the country’s largest dealership chain, stopped doing Cash for Clunker transactions after Friday. AutoNation had completed over 12,000 deals, according to spokesman Mark Cannon.
“It’s been a great run,” Cannon said.
Under Clunkers, which launched July 27, vehicles purchased after July 1 are eligible for refund vouchers worth $3,500 to $4,500 on traded-in cars with a fuel economy rating of 18 miles per gallon or less.
here is an updated list of traded-in and purchased cars (curtesy of our friends at Jalopnik).
Top 10 New Vehicles Purchased
1. Toyota Corolla
2. Honda Civic
3. Ford Focus FWD
4. Toyota Camry
5. Hyundai Elantra
6. Toyota Prius
7. Nissan Versa
8. Ford Escape FWD
9. Honda Fit
10. Honda CR-V 4WD
Top 10 Trade-In Vehicles
1. Ford Explorer 4WD
2. Ford F150 Pickup 2WD
3. Jeep Grand Cherokee 4WD
4. Jeep Cherokee 4WD
5. Ford Explorer 2WD
6. Dodge Caravan/Grand Caravan 2WD
7. Chevrolet Blazer 4WD
8. Ford F150 Pickup 4WD
9. Chevrolet C1500 Pickup 2WD
10. Ford Windstar FWD Van
This list is subject to change as the final numbers come in. So stay tuned for further updates.
(Source: Business Week & WSJ)
Ford Motor Co. is upping its production of fuel efficient vehicles in the third quarter to meet demand, the company, says for vehicles being purchased under the extended Cash for Clunkers program, as well as overall increased interest in new cars by consumers.
Cash for Clunkers is pushing August sales so far this month to levels not seen since before the global credit meltdown last Fall. In the first few days of August, Edmunds.com says the auto industry was cracking at a 16 million a year rate. That’s up from less than a 10 million selling rate in the first half of the year, and less than 12 million rate in July.
Ford increased its third-quarter production to 495,000 new vehicles, driven primarily by the demand for its Focus and Escape models. The company will build 6,000 more Focus vehicles during the quarter through overtime and Saturday shifts.
Ford senior sales analyst George Pipas says that it is too early to project the selling rate for August on the whole. “But I can tell you that retail sales we are seeing is eyepopping versus a year ago.”
Ford’s chief economist Ellen Hughes-Cromwick said the clunkers program could generate as much as 750,000 in new vehicle sales for the industry and is now on pace to run out of money within the next three weeks.
“This is what fiscal stimulus is suppose to do when you are in the financial situation we were in,” Hughes-Cromwick said.
Ford’s European executives said Wednesday they are holding formal talks with different governments to continue similar clunkers programs which are boosting sales in such countries as Germany. Russia, which is in a deep economic slump, also said Wednesday it too will start a scrappage offer.
Ford will build 10,000 more Focus sub-compact cars and Escape crossover SUVs than it had planned. In July, the first month of the government’s Clunkers program, the Focus was the top model purchased with the help of government rebates, while the Escape was the only utility vehicle to make the top ten.
Ford is increasing its North American production to a total of 495,000 units in the third quarter, an increase of 18% from the same quarter in 2008. Ford also plans to produce 570,000 vehicles in the fourth quarter, a 33% boost from the same quarter last year and 15% above planned third-quarter output.
The increased production will come after the Clunkers program has run out of money, but Ford says it will need it to replenish depleted inventories and deal with increasing demand for more fuel efficient vehicles as consumers anticipate higher gas prices with a recovering economy.
Click here to read the entire article.
(Source: Economic Policy Institute)
![[figure]](http://www.epi.org/page/-/img/20090805_snapshot.jpg "Image Courtesy: Economic Policy Institute")
Image Courtesy: Economic Policy Institute
The program has already prompted thousands of Americans to upgrade older, less fuel efficient cars and is generating much-needed sales for troubled automobile manufacturers and related industries while decreasing gasoline consumption and improving environmental outcomes. But has there been an attempt to quantify these impacts on fuel efficiency and environment? Yes. The Economic Policy Insititute analyzes the fuel efficiency improvements & emissions reductions and made it easy for us to understand. Here is a quick peek at the study & the awesome graphic that explains the cost savings in fueling a clunker vs. a new car. The study methodology involves the following elements:
Based on these assumptions, the study team has determined that the fuel economy improvements will save an estimated $821 per traded vehicle annually (see chart above). How? Reduced gas consumption means less dependence on foreign oil, and more money in the pockets of consumers that could be used for domestic consumption. According to the Department of Transportation, the average fuel efficiency of old cars traded in via the program is 15.8 miles per gallon, while new cars had an average MPG of 25.4.
On average, total gas consumption will drop by 87 million gallons per year, and American consumers will use 22.2 million fewer barrels of foreign crude oil. The environmental impact of reduced gas consumption is considerable as well. We estimate that the program will result in about 850,000 fewer tons of CO2 emissions per year (3.4 tons per vehicle annually). This reduction equals more than two-thirds of the annual CO2 emissions linked to household electricity, heating, and waste.
(Source: Green Car Congress)
Buoyed by the US government’s CARS (“Cash for Clunkers”) program, US auto sales slowed their decline in the US in July, dropping on 12.1% to 997,824 units, accordingto summary figures from AutoData. Passenger car sales dropped 10.6% to 554, 527 units, while light truck sales dropped 14.1% to 443, 297 units. All comparisons are by volume. As a result, the SAAR for July surged to 11.24 million units; US SAAR had been below 10 million since January.
Hybrids had an especially good month, with reported sales jumping 31.8% year-on-year to 35,429 units, representing a 3.55% new vehicle sales market share for the month—the highest monthly share yet. Hybrid gains were largely due to an increase in Prius sales (up 29.7% to 19,173 units) and Ford hybrids (up 323% to 5,353 units).
Image Courtesy: Green Car Congress - Hybrid sales rise, thanks to Cash for Clunkers
According to the Alliance of Automobile Manufacturers, CARS sales reflected demand for more fuel-efficient vehicles:
Image Courtesy: Green Car Congress - Total Reported Monhtly Sales of Hybrid Vehicles in US
Here is a quick snapshot of sales volume by manufacturer (in the hybrid category):
Our friends at Jalopnik yesterday published a revised list of ten most purchased vehicles under the Cash for Clunkers program:
1. Ford Focus
3. Honda Civic
4. Toyota Prius
5. Toyota Camry
9. Honda Fit
10. Chevrolet Cobalt
Click here to read the entire report.
(Source: AP Via Yahoo & Time)
“Cash for clunkers” could have the same effect on global warming pollution as shutting down the entire country — every automobile, every factory, every power plant — for an hour per year. That could rise to three hours if the program is extended by Congress and remains as popular as it is now.
Climate experts aren’t impressed.
Compared to overall carbon dioxide emissions in the United States, the pollution savings from cash for clunkers do not noticeably move the fuel gauge. Environmental experts say the program — conceived primarily to stimulate the economy and jump-start the auto industry — is not an effective way to attack climate change.
“As a carbon dioxide policy, this is a terribly wasteful thing to do,” said Henry Jacoby, a professor of management and co-director of the Joint Program on the Science and Policy of Global Change at MIT. “The amount of carbon you are saving per federal expenditure is very, very small.”
Officials expect a quarter-million gas guzzlers will be junked under the original $1 billion set aside by Congress — money that is now all but exhausted.
Calculations by The Associated Press, using Department of Transportation figures, show that replacing those fuel hogs will reduce carbon dioxide emissions by just under 700,000 tons a year. While that may sound impressive, it’s nothing compared to what the U.S. spewed last year: nearly 6.4 billion tons (and that was down from previous years).
That means on average, every hour, America emits 728,000 tons of carbon dioxide. The total savings per year from cash for clunkers translates to about 57 minutes of America’s output of the chief greenhouse gas.
Likewise, America will be using nearly 72 million fewer gallons of gasoline a year because of the program, based on the first quarter-million vehicles replaced. U.S. drivers go through that amount of gas every 4 1/2 hours, according to the Department of Energy.
Time Magazine reports that initial data released by Department of Transportation, however, shows that so far cash for clunkers has been a green success. The clunkers averaged 15.8 m.p.g., compared with 25.4 m.p.g. for the new vehicles purchased, for an average fuel-economy increase of 61%. On the whole, American drivers are trading in inefficient trucks and SUVs for much more efficient passenger cars. Car manufacturers like Nissan are already retooling some models to improve their fuel economy so they can qualify for the credits. The early numbers were enough to convince California Senator Dianne Feinstein to go from criticizing cash for clunkers as too lax to supporting additional funding for the bill in the Senate. “This program has done much better than we ever thought it would for the environment,” she told reporters on Aug. 4.
It’s called the efficiency paradox: as we get more efficient at using energy — through less wasteful cars and appliances — the overall cost of energy goes down, but we respond by using more of it. In the case of cars, that means driving more. Ultimately our gas bill stays the same, but we spend more time on the road and pump the same amount of greenhouse-gas emissions into the atmosphere. The earth isn’t any better off.
To address the emissions problem directly, we need to look at fuel, not Fords: institute carbon taxes that raise the price of gas. We already know that higher gas prices discourage driving and reduce greenhouse-gas emissions — total vehicle miles traveled in the U.S. declined 3.6% in 2008 compared with the previous year, thanks largely to the sky-high price of gas for much of 2008. (The recession didn’t help, but sharp declines in driving began well before the bottom dropped out of the economy.) As gas prices have fallen in 2009, however, driving has begun to tick back up.
Click here to read the entire article.
(Source: AP via Yahoo & New York Times)
The Senate will vote to extend the popular “cash-for-clunkers” program before going home on Friday, Majority Leader Harry Reid declared Tuesday in a strong signal the government won’t let the trade-in rebates die under the surging demand that has almost exhausted federal backing.
Images via Apture
Reid’s GOP counterpart, Mitch McConnell of Kentucky, predicted his party would not block a vote and “the matter will be completed.” Republicans were still demanding a chance to amend a House-passed version that would extend the program into September, but Democrats were confident the bill wouldn’t be changed.
“There obviously is a real pent-up demand in America,” the Transportation secretary, Ray LaHood, said. “People love to buy cars, and we’ve given them the incentive to do that. I think the last thing that any politician wants to do is cut off the opportunity for somebody who’s going to be able to get a rebate from the government to buy a new automobile.”
Visiting the White House for a lunch with the President, Harry Reid, the Senate majority leader, was also asked about the program.
“We’ll pass ‘cash for clunkers,’ ” he said. And Mitch McConnell, Republican of Kentucky, who is the minority leader, said there would be a vote, but he did not suggest an outcome. Opposition to extending the program has been dissipating. One vocal GOP critic, South Carolina Sen. Jim DeMint, said Tuesday he would not try to block the legislation. And three lawmakers who wanted the program limited to the purchase of even more fuel-efficient vehicles said Monday they would back the plan.
Republicans have said it puts the government in the bad position of picking winners and losers.
“People want to know what’s going to be next. Cash for shoes? Cash for groceries?” said Sen. Richard Shelby, R-Ala.
The first $1 billion in funding is expected to lead to sales of 250,000 vehicles and the additional $2 billion would generate sales of perhaps a half-million more vehicles. The program has encouraged about a quarter-million Americans to buy new cars at time when the economy is still in recession and badly needs a boost.
Buyers of new cars and trucks have swamped formerly deserted auto dealers to claim their rebates — up to $4,500 when they trade in older models that get significantly worse gas mileage. The older vehicles are then scrapped.
Because the House has already recessed for August, any change by the Senate would effectively interrupt the rebate program until Congress returns in September. Consumers who don’t get in on a deal this week would have to wait until then to take advantage of the rebates, assuming eventual passage.
Click here to read the entire article.
(Source: Detroit News via Autoblog & Bloomberg)
Image Courtesy: Apture - Ford Focus
The National Highway Traffic Safety Administration has processed 80,500 transactions so far, and the early winner of Cash For Clunkers appears to be the Ford Focus. The Detroit News is reporting that the Focus is the number one vehicle purchased under the government program, showing us why Ford’s C-Segment vehicle gained 43.6% in July. Ford also saw an amazing 97% increase in Escape sales in July, a tally that was likely improved with the help of Cash For Clunkers.
The controversial and somewhat clumsy program is drawing plenty of attention for its popularity amongst car buyers, and Detroit automakers appear to be taking more than their fair share of sales.
The White House says 47% of all vehicles sold through the bill so far come from US automakers; 2% higher than the domestics’ 45% overall share. Four of the top 10 vehicles purchased under the program come from domestic automakers, and over half of all vehicles were built in the States.
This wildly popular program is currently all but spent and is awaiting the Senate nod for a further $2Billion cash infusion to keep it going. On Friday, the House approved the $2 billion increase. The Senate is expected to vote Wednesday or Thursday; the White House is pressing it to act. Transportation Secretary Ray LaHood told MSNBC that the program has been a “lifeline to the economy.”
To drum up support for more dollars, the White House is touting the program’s value. White House spokesman Robert Gibbs says the average fuel economy increase so far is 9.4 mpg; a 61% increase verses the vehicles destined for a sodium silicate bath. So far, 83% of the vehicles traded in have been trucks, while 60% of the vehicles purchased under the program have been cars. The White House estimates that Cash For Clunkers will save the average car buyer $700 – $1,000 in gas prices during the life of the vehicle.
The sales last month from the federal incentives may result in fewer buyers later this year after the program ends, George Pipas, Ford’s sales analyst, told CNBC today.
A similar program in Germany won’t sustain sales growth into 2010 as those incentives expire, said Matthias Wissmann, president of the German carmakers, today at a Frankfurt news conference. Germany’s car market expanded by 26 percent from a year earlier in the first half, propelled by increases of at least 40 percent in May and June.
Our favorite auto website, Jalopnik, offers a comprehensive list of the top 10 vehicles sold and trade-ins) dealt under this CARS program.
The Ten Most Traded-In Vehicles (vehicle’s EPA mileage)
1. 1998 Ford Explorer (14-17 mpg)
2. 1997 Ford Explorer (14-18 mpg)
3. 1996 Ford Explorer (14-18 mpg)
4. 1999 Ford Explorer (14-18 mpg)
5. Jeep Grand Cherokee
6. Jeep Cherokee
7. 1995 Ford Explorer (15-18 mpg)
8. 1994 Ford Explorer (15-18 mpg)
9. 1997 Ford Windstar (18 mpg)
10. 1999 Dodge Caravan (16-18 mpg)
The Ten Most Purchased Vehicles (vehicle’s EPA mileage)
1. Ford Focus (27-28 mpg)
2. Honda Civic (24-42 mpg)
3. Toyota Corolla (25-30 mpg)
4. Toyota Prius (46 mpg)
5. Ford Escape (20-32 mpg)
6. Toyota Camry (23-34 mpg)
7. Dodge Caliber (22-27 mpg)
8. Hyundai Elantra (26-28 mpg)
9. Honda Fit (29-31 mpg)
10. Chevy Cobalt (25-30 mpg
Click here to read the entire article.
