The Car Allowance Rebate System, or CARS, was recently created by Congress to take off old and inefficient vehicles off the road. Citizens, starting on July 1, were given the opportunity to take their vehicles to dealers, in exchange towards credit for a newer, more fuel efficient car. The Transportation Department only began to begin accepting applications on Monday, however dealers had already accumulated a large volume of applications to submit to the department. There were requirements that had to be met, and 250,000 applicants were accepted. With the allocation of an average of 4,000 per car, the $1 billion allocated to this program was used in about 4 weeks.
This program showed great promise. It was a step toward a better environment, and aid the economy by boosting sales of automobiles. Yet, the mark on the industry appears to be minimal, giving only a small boost up from the projected 10 million vehicles, a far cry from last year's mark of 16 million. This program has obviously been attractive to many people, and it has slightly helped the failing auto industry, but can it be argued that it has made a significant impact. A quarter of a million dollars, that's only a small fraction of a desired outcome nearing 16 million sales. During this recession Congress is trying to do its best to aid the nation, and the economy. Yet, what is the opportunity cost of this program? Was the 1 billion enough of an investment? Or was it to much for a program that made so little an impact? Selling 25% of a million in 4 weeks is no mean feat, and if Congress decides to allocate another 3 billion, maybe a total of 1 million new vehicles will be purchased. However, the program is now suspended because it has already used all of its funds, and there are still many other needs that Congress needs to address, rather than those of an auto industry with so little foresight.
Commentary on my classmate's blog
15 years ago