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
In the PLOG's post, Too Little Cash for Too Many Cars, author Ultima addresses the issue of the new government plan, CARS, otherwise known as "Cash for Clunkers", in which citizens turn in their older inefficient vehicles at their car dealerships for newer and more gas efficient vehicles. I must agree that many questions about this plan remain a mystery, especially when it has to do with money. Was $1 billion enough of an investment, or was it too much?
ReplyDeleteIn theory, this plan seems pretty good, however like most plans the outcome is unknown until the plan is put in action. Thus far, CARS has proven to be quite popular as thousands applied to the system, before the plan was even put into effect. Yes, Ultima is correct in saying that only a minimal amount has been made out of this, but yet again the plan is still in its beginning stages. The program officially started on July 1st BUT the claims did not begin until July 24th, making the results worthy of only a few weeks. The program will need more than a week and a half to determine whether it is really beneficial or not.
It is true that our country has a lot more issues going on presently, however one of our heavier problems is our economy. This program, CARS, not only is it benefitting our environment, but by purchasing newer vehicles, it is bringing in more money into the automobile industry, and thus into our economy. It was mentioned that even those that did not fit into the requirements to trade in their cars, bought new vehicles regardless. At this point, the system has exhausted their funds, and therfore suspended the plan, but they are waiting on Senate approval to provide $2 billion more to continue the plan.
CARS is still a relatively new system, and many including myself are only starting to hear about it in commercials and other sources recently. If the system gains more popularity and Senate approves the additional financing, then possibly both citizens and our nation as a whole will benefit out of such plan. The final results, however, are yet to be seen.