Just when it looked like the government’s CARS program, or “cash for clunkers,” was running on empty, the Senate voted on Thursday to give additional funding to the program.
The approval will add $2 billion to “cash for clunkers,” which quickly burned through its original $1 billion in funding. The most recent federal data tells us that as of Wednesday, 184,304 vehicles have been sold; resulting in $755.2 million in vouchers the government will have to shell out. That extra $2 billion in funding should be enough to cover vouchers for another 475,000 new automobiles.
But who exactly benefiting from the program? Well, for one, if you’ve got a clunker on your hands and you’re someone who’s been on the fence about getting a new car, the program presents the perfect opportunity to get a new vehicle. For example, trade in your clunker for a new 2010 Toyota Corolla (as of today, the Corolla is the #1 most popular vehicle in the program) and the MSRP drops from $15,350 to $10,850.
But surely where there’s someone getting a deal, someone else is hurting. While the program has provided a much needed boost in sales to the US’s big three automakers, so far about 53% of the new automobile sales for the program have been foreign brands.
And what about used car dealers? As a result of the program, used cars have become scarce, but the demand for a low-priced auto is still there…and prices on the used cars aren’t low anymore-they’re through the roof. While new car dealers are reaping the benefits of increased activity on the sales floor, the used car dealer is left to stand in the shadow of a plan that’s receiving unprecedented consumer and media attention.