The Obama administration's "cash for clunkers" program, in which the government gives consumers a $3,500 or $4,500 discount to trade in their old vehicle and purchase or lease a new one, has essentially run out of money. How did it happen so quickly? One explanation is provided in the video above. Here's another, from a Democratic Senate aide.
Before it passed, there was a big debate between the auto state lawmakers and the pro-enviro lawmakers over whether the bill should be stimulus for the auto industry or whether it should combat global warming by getting inefficient cars off the road. The auto-state senators won, cars of [many] varieties were made eligible, and the money got spent in a blink. For next round, there will probably be a renewed push to increase the mileage requirements of the new purchases.Ah, so it was one of those deals. I'll pretend to be shocked.
For more on "cash for clunkers," read this remarkably cogent explanation.
It's not very surprising that it ran out so fast. $1 billion/$4,000 (avg. rebate) = 250,000 rebates. Divide that by 50,000 nationwide dealers (number from my b.i.l. who sells cars) = 5 rebates/dealer. The b.i.l.'s dealer was doing several of these deals a day for at least a week.
I read somewhere that the inherent trade-in volume was about 200,000 cars for the same period, so basically they got an extra 50,000 cars traded in, and this wasn't really demand creation, it just shifted the demand from later months to July. More money well spent.
There's an ad for the program running alongside this story. It includes, in eentsy print,
"Government funding for this program is limited and won't last forever, so hurry to your dealer today."
Still waiting for "cash for booted junkers" because they got me at the airport which, is not a great way to impresss the person you're meeting at arrivals.