Study: ‘Cash for Clunkers’ Reduced Spending

Study: ‘Cash for Clunkers’ Reduced Spending | Heartlander Magazine

"Economists from Texas A&M University evaluated the stimulus program and found it cost the automobile industry billions of dollars. 

The study –"Cash for Corollas: When Stimulus Reduces Spending" -- highlighted how the environmental objectives of the program interfered with the stimulus objectives.

Short Boost, Then Decline

The study found the increase in sales for the two-month program was completely offset by lower sales during the next seven to nine months. Furthermore, the fuel-efficiency restrictions on the types of vehicles that qualified for trade-in under the program reduced industry revenue by $3 billion over the 9-to-11 month period.

People who participated in the cash-for-clunkers program tended to purchase less-expensive vehicles such as the Toyota Corolla, according to the report. Each household that purchased a new vehicle under cash-for-clunkers spent an average $4,600 less on it than they otherwise would have.