Feds: Cash for Clunkers Worked, but Uncertainties Remain

By Stephen Markley  on April 30, 2010

The Cash for Clunkers program succeeded in its broad, basic objectives of providing economic stimulus to a struggling industry, but ultimately the results are difficult to gauge, according to a report by the Government Accountability Office.

Despite Cash for Clunker’s success, the GAO found that “the extent of the program’s stimulative effect on the economy is uncertain." For instance, some of the sales may have happened regardless of the program, although the National Highway Traffic Safety Administration estimates that 88% of the 677,842 vehicles sold under the program were to buyers who otherwise would have stayed home.

The program's other goal was to improve fuel economy, and it did. The average fuel economy of the vehicles traded in was 15.7 mpg, while the new cars purchased or leased averaged 24.9 mpg. But because new vehicles tend to have far better mileage, the GAO says it’s reasonable that many of the new cars would have been more efficient anyway.

According to the Department of Transportation, NHTSA had limited time to design and implement the program’s consumer survey, which may make it harder to study for future policy decisions.

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