Well, the Cash for Clunkers program, aka CARS, ended on August 24th. The original $1 billion, which lawmakers thought would last until October, was gone within two weeks, which prompted lawmakers to grant another $2 billion towards the program.
Ultimately, CARS increased car sales, and the sales of more environmentally friendly cars, while removing junkers from the road. It offered a shot in the arm to ailing car dealerships and the U.S. auto industry at large.
On the flip side, the program was not without its problems. The government did not execute the program well, and their computers often became overloaded and crashed. Consumers and car dealers became frustrated by the lack of conveyed information.
Additionally, the program caused some mechanics to suffer from loss of business. A buddy of mine works in a transmission-rebuilding shop. He said his shop has been “dead” for the past couple of weeks, because instead of rebuilding, people were choosing to buy or lease new cars.
Should the government offer another CARS program down the road, we at Wallet Blog hope that it will have even stricter miles per gallon (m.p.g.) requirements. For example, the reward should be a function of the how much more efficient is the new car vs. the clunker. The more m.p.g. in savings the higher the reward. The original version of the bill did have more stringent mileage requirements, but that version was watered down in hopes of getting the bill through Congress.
CARS 2.0 might also make creative provisions for those in the auto-repair industry. For example, an incentive for consumers who choose to convert their diesel cars so that they run on vegetable oil.
The auto industry has received an influx of cash it desperately needed. Next time, I hope we’ll see stricter requirements for mileage and looser requirements for auto-related businesses.