January 14, 2010

The Economic and Fiscal Contributions of the "Cash for Clunkers" Program: National and State Effects

The Consumer Assistance to Recycle and Save Program, also known as “Cash for Clunkers”, was a $3 billion government incentive to boost automotive industry sales that was in place July 24, 2009 through August 24, 2009 that involved consumers trading in their older and less fuel efficient vehicles for new vehicles. Using the REMI model, the Center for Automotive Research estimated net new vehicle sales and employment induced by the Cash for Clunkers program and found that the program sold 395,000 new vehicles, added 40,200 full-time equivalent U.S. jobs, increased gross personal income by $2.085 billion, and net revenue by $1.275 billion. The Center for Automotive Research also included recommendations for future implementations of similar programs, most notably for policy makers and program administrators to evaluate the equity attributes of the program. In terms of this study, relatively affluent consumers were able to take advantage of Cash for Clunkers, but low-income workers could barely participate and, therefore, saw little economic benefit.

Center for Automotive Research – The Economic and Fiscal Contributions of the “Cash for Clunkers” Program [full PDF]