Cash For Clunkers: The Data On Why It's Working Page 2

By John Voelcker

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Two more Top 10 trade-in slots were sport utilities as well--the Jeep Cherokee and Jeep Grand Cherokee--with two minivans, the 1997 Ford Windstar and the 1999 Dodge Caravan bringing up the rear. All 10 of the top trade-ins were domestic vehicles.

So what replaced the SUVs? Mostly small sedans from a mix of domestic and foreign carmakers. Of the first 80,000 trade-ins, according to the Transportation Department,  47 percent of the replacements came from US automakers General Motors, Ford [NYSE: F], and Chrysler.

That's marginally higher than the US carmakers' current overall market share of 45 percent. Among foreign brands, Honda [NYSE: HMC] and Toyota [NYSE: TM] particularly benefitted as well.

2009 Ford Focus S

Enlarge Photo

The single highest-selling vehicle in that group was the 2009 Ford Focus. Beyond that, in order, were the Honda Civic, Toyota Corolla, Toyota Prius, Ford Escape, Toyota Camry, Dodge Caliber, Hyundai Elantra, Honda Fit, and Chevrolet Cobalt.

Just one of the 10 was a hybrid; nine were compact or midsize sedans or hatchbacks, and one was a crossover sport utility. It's also worth noting that one of every three Volkswagens sold in July was a Jetta TDI clean diesel, though its sales didn't reach the Top 10.

Of all the new vehicles purchased, initial data suggests that far more than half were built in North America, whether by domestic or foreign carmakers--including six of the top seven, with only the Toyota Prius manufactured exclusively in Japan.

Winners and losers

But to the program's second goal, the annualized sales rate for the last week of the month rose well over the watermark 10-million number, to a rate perhaps as high as 12 or 13 million by some estimates.

Ford even managed a year-over-year sales gain for the month, its first since 2007, as it continues to benefit from being the only one of the Detroit Three not to enter bankruptcy and be bailed out by the Federal government.

The Administration's view: "This is the one stimulus program that seems to be working better than just about any other program," US Secretary of Transportation Ray LaHood said to CNBC. "It's a lifeline for automobile workers and automobile makers."

And President Barack Obama chimed in as well, saying: "This program has been an overwhelming success, allowing consumers to trade in their less fuel efficient cars for a credit to buy more fuel efficient new models ... [it] has proven to be a successful part of our economic recovery, and will help lessen our dangerous dependence on foreign oil, while reducing greenhouse gas emissions and improving the quality of the air we breathe."

Clunkers

Rules: 22 mpg or more for cars

Under the program, owners of 1984-2002 vehicles with a combined EPA mileage rating of 18 miles per gallon or less qualified for a $3,500 voucher towards the purchase of a new car rated at 22 mpg or better. The maximum voucher of $4,500 was available to those who bought cars rated at 10 mpg (or more) higher than the trade-in.

There's a different scheme for trucks: The new vehicle must be rated at 18 mpg or better, and it also has to be 2 mpg more efficient than the truck traded in to qualify for a $3,500 voucher. Boosting the mileage by 5 mpg or more gets you the full $4,500.

On the other hand...

To be fair, we should say that the CARS program is working only if you accept the notion that the US government can legitimately place incentives on certain types of behavior by its citizens--in this case, buying more fuel-efficient vehicles.