Thursday, July 30, 2009
Government To Suspend Cash For Clunkers
This is hot off the news....the government plans to suspend temporarily the Cash For Clunkers Program. The program offers $3500 to $4500 for trading in an older vehicle for a new more fuel efficient vehicle. The plan does require that only certain vehicles qualify for the program.
Apparently, it is so popular that they are concerned about exceeding the $1 billion dollars earmarked for the project. The plan would have applied to approximately 250,000 vehicles. Thru Wednesday 22,782 vehicles had been purchased thru the program.....with an estimated 25,000 deals had not yet been approved by the National Highway Transportation Safety Agency.
Members of congress from the auto producing states have approached the congressional leaders about extending the program. Rep. Candice Miller, R-Michigan indicated that "This is simple the most stimulative $1 billion the federal government has spend during the entire economic downturn".
As I outlined in my previous post this could be a great program for the auto manufacturers, dealers and the consumers that were able to take advantage of the program. Last month, over 850,000 cars were sold for the month. This program would apply to about ten percent of the sales over the three months of the program.
So, the government was serious about stimulating auto sales they would substantially increase the program. The small amount of one billion dollars is going to increase sales temporarily but will have no impact in the long term.
Update: The House of Representatives have approved an additional $2 billion in funding on July 31st to continue program. But, the Senate is holding back approval. The continuation of the program depends on that vote.