From AAIA Capital Report

The General Accounting Office (GAO) stated that the Cash for Clunkers Program, officially known as the Car Allowance Rebate System (CARS), did meet its objectives of helping to stimulate the economy and putting more fuel-efficient vehicles on the road. However, the GAO stated in the report titled “Lessons Learned from Cash from Clunkers Program,” that the extent to which the program met its goals is uncertain. For example, nearly 680,000 consumers purchased or leased vehicles using the program’s credit, yet some of these sales would have happened anyway. 

In addition, the National Highway Traffic Safety Administration (NHTSA) found that the average combined fuel economy of new vehicles purchased or leased under the program was 24.9 miles per gallon (MPG), compared with 15.7 MPG for vehicles traded in. However, the GAO believes that the entire difference in combined fuel economy may not have been a direct result of the program. 

While NHTSA’s consumer surveys estimated that the program reduced fuel consumption for the typical CARS participant, GAO found that NHTSA did not follow some generally accepted survey design and implementation practices thereby posing a potential risk to the reliability of estimates based on the survey data.

The report further found that stakeholders in the CARS program reported varied experiences. The program benefited eligible consumers and that participation in the program was distributed across the country and reflected the U.S. population distribution. Representatives of scrap and salvage industries reported that the impact of the CARS program was mixed, and car companies and dealerships generally benefited from the increased sales despite some administrative challenges.

The GAO also spoke to representatives from the used car industry and to charities and received mixed reviews, many stating that it would be difficult to isolate the impact of the Cash for Clunkers program.

Click here for the report.