Analysts Offer Suggestions on Spurring Car Sales
The first idea is scrappage, in which the government offers an incentive — say $4,500 — for drivers to scrap their old, inefficient vehicles for new models. As we’ve already reported, several European countries are doing this with positive results. CSM estimates scrappage programs have bumped sales by 400,000 vehicles in the countries that are trying them, and that they could result in an additional million new-car sales for the U.S. in 2009 and 1.5 million to 3 million in 2010. Sales for 2009 are projected to be off by at least 5 million units.
The second idea is to take Hyundai’s successful Assurance program and replicate it on a federal level. Analysts believe that for $5 billion or less, the government could guarantee that if a car buyer lost his or her job and could not find work after three months, that person could return the car with no penalty. It’s thought this might tap into a pent-up demand for new vehicles as people hold off buying while they’re worried about job security.
Both of these plans would have the advantage of stimulating not just one or two automakers, but the entire industry. The scrappage plan would likely offer the most immediate boost, but the public might see the moves as another bailout. What do you think? Should there be a stimulus for consumers? A price cap? Which do you think is a better idea?
Analysts Share Ideas to Help Auto Industry (USA Today)
