One of the most visible programs in the federal stimulus package Congress approved early this year was the Cars Allowance Rebate System (CARS), better known nationally as the Cash for Clunkers program.
Participating new car dealers were able to extend federal rebates to purchasers who traded in used cars for more fuel efficient new vehicles. The program generated a flurry of new car sales and provided a brief respite for an industry that has been suffering through the economic downturn.
How significant was the influx of stimulus money to car dealers and buyers? Grant L. Petersen, President and CEO of Bronco Motors in Boise provided the following assessment for members of Idaho's Congressional delegation.
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Honorable Mike Crapo,
As an Idaho automobile dealer, I wanted to share my thoughts with you as we wind down from the Cash For Clunkers program. While I know some Idaho representatives supported it and some didn’t, I will tell you that the program made a significant impact on our industry.
I believe the Cash For Clunkers program was an absolute success. It generated the most immediate and measurable impact of any of the stimulus funds spent to date. It pulled people into the market that may not have otherwise purchased a vehicle and generated headlines nationwide. Americans on “Main Street” were able to directly benefit from this tiny portion of the economic stimulus funds, the bulk of which will never reach them.
We were very pleasantly surprised at the quality of customers that came to during this program. These were largely people with good credit, many of whom even paid cash for their new vehicles. The feeling that it would bring people into the market that would soon have their vehicles repossessed, adding to mounting credit woes, appears to have been largely unfounded.
The program generated much-needed income for dealers who have been faced with a long drought in sales. It generated employment industry-wide, as well as additional income for our employees, recyclers, tow companies, marketing companies and others. We spent more in advertising, benefiting our local newspapers and TV and radio stations. Additionally, in a time of severe state budget shortfalls, the impact of the sales tax revenue created cannot be dismissed.
Just as important as the economic impact was the upshot of getting hundreds of thousands of old, potentially hazardous vehicles off the road. The effect of the overall improvements in safety, gas mileage and environmental quality will be felt for a long time to come.
While the rules were complicated and administration of the program was extremely difficult for dealers, I believe it was a very worthwhile effort. T date, we have been paid on 98 percent of our claims and our customers – your constituents – are very happy with the results.
While I do not believe in big government or runaway spending, it remains that this program benefited many people in an immediately visible way. And while the “hangover” appears to be severe, I am confident we will find additional ways to help rebuild our industry and economy, to the ultimate benefit of everyone.
Kudos to those we worked with at the Idaho Governor’s office, the Idaho Transportation Department and Idaho Division of Motor Vehicles for their long hours and dedication in helping to solve what could have been potentially disastrous problems for Idaho dealers. With everyone pulling together, we were able to successfully navigate this program, help Idahoans and generate additional tax revenue.
I would welcome the opportunity to discuss this matter further and give you any additional feedback you may be interested in.
Grant L. Petersen Jr.