Economics: Cash-for-Clunkers impact

Analysts: There's no guarantee that Cash-for-Clunkers will really drive car sales


Four analysts interviewed by Automotive News estimate that only 70,000 to 200,000 more vehicles will be sold because of the clunkers bill. According to the detractors, there are three main factors that will likely blunt the bill's impact:

  • It's just four months long – the law will only offer cash for your clunkers from July 1 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 to purchase a new vehicle right now – even if you can get a $4,500 federal credit on the price. More often than not, it makes greater sense to just buy a used car.

Comment: More government stupidity!

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