Some Manufacturers Call For The Return For A “Cash For Clunkers” Program

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  The main goals for this program are lowering emissions and stimulating new car sales.

• This type of program was launched in the late 2000s with mixed reviews.

• With a few serious tweaks over the last program, it could work.

The “Cash For Clunkers” program, of CFC, was met initially with mixed reviews from both dealers and consumers. The idea was to set a minimal trade-in amount for any and all junkers, an amount that could climb slightly depending on income. Many jumped on the occasion however countless dealers found themselves “in the hole” as they waited for their money. The result was a noticeable increase in new deliveries, but there was a cost.

The current pandemic is causing car manufacturers on both sides of the Pond to consider the idea of once more looking into a CFC program. Ford has given the idea much thought and, obviously, wants governments to step in to sponsor the stimulus program. Mark LaNeve, Ford’s vice president of U.S. marketing, sales and service said the following when talking about a similar program launched a decade ago: “Cash for clunkers was very effective at that time. It would be nice to think we could have something equally as effective for 2020 when we get out of this because it was a great program.”

Meanwhile, in Europe, factories are slowly starting up again however there are fears that it will take far too long for consumers to get back to buying new cars unless a scrapping program for older vehicles is put into place. Volkswagen and Mercedes-Benz and BMW think this type of stimulus arrangement would safeguard hundreds of thousands to millions of jobs. Germany has not ruled out the idea but there are no current plans to implement it yet.

According to Adam Jonas, Head of Global Auto & Shared Mobility Research at Morgan Stanly, says that there will be a CFC program and that it’s going “to be much larger in scope and longer in duration than what we saw. In 2008 and 2009, we saw a $3 billion package that stimulated about $14 billion of purchases. This time around we’re expecting about $10-billion of stimulus that drives $50-billion of purchases.” He adds that this crisis will be considered as a “blip in electric vehicle adoption.”

One important consideration is the level of debt most North American new car buyers are getting themselves into. Edmunds reported earlier this month that the average loan period has just passed 70 months! The question is whether or not a $4,000 or $5,000 CFC incentive will do the consumer and the economy any good should anything else go wrong in the near future…

In the US, the 2009 CFC was considered by many as a bad joke. In fact, back in 2009, Car and Driver called it more of a political manoeuvre than anything actually useful. We’re quite torn over the idea of another CFC program as we recall reading lists with cars that were scrapped that should have survived as future classics. One of the side-effects was that many old cars increased in value in the years following the last CFC.

What if we could perhaps allow the possibility of purchasing some of the “clunkers” before they get crushed? Granted, the goal is to remove the old “gas-guzzlers” from the road but most of these potentially rare gems will only be driven a few hundred miles a year. This way, the government also gets some money back  all the while helping out the new car industry. We would like to offer our services to select which cars get to live from the list of clunkers…

We are, however, liking the idea that EVs may gain serious traction from such a program. Given that most large carmakers have some interesting EVs on the way in the next 12-18 months, the program may be far more successful at reducing greenhouse emissions compared to the 2009 program.

There will be far more to report on this in the coming weeks and months.