Kelley Blue Book’s Market Intelligence survey shows that the federal CARS program persuaded many consumers who were considering buying a used auto to buy a new vehicle instead.
The number of respondents participating in the survey who said they had decided to buy a new vehicle instead of a used one increased from 12 percent to 20 percent while the program was in effect.
According to the U.S. Department of Transportation, approximately 700,000 used clunkers were traded in and $2.8 million in rebate applications were filed by new car dealers.
The DOT reports that an estimated 84 percent of consumers participating in the program traded in trucks. Of the new vehicles purchased through the program, 59 percent were passenger cars.
According to a report conducted by CNW Market Research, however, 17 percent of consumers who traded in their old clunkers now have “some doubts” or “serious doubts” about having purchased a new vehicle.
CNW’s survey of about 1,000 consumers who participated in the Cash for Clunkers program found that most of those who expressed some level of doubt about their new purchases said they now regret having a new monthly car payment.
Buyer’s remorse is not uncommon among consumers who make large purchases. Typically 6 percent to 8 percent of new auto buyers experience some level of regret over their new purchases within the first month of ownership.
For automakers and new car dealerships, however, there appear to be no regrets.
According to Rick Wainschel, senior vice president of market intelligence and brand strategy for Kelly Blue Book, “Cash for Clunkers successfully got consumers in the mind-set to shop for a new car again, despite the economic hardships the country is experiencing.”
While the Cash for Clunkers program was in progress, Kelley Blue Book found that 59 percent of auto shoppers surveyed indicated that they were likely to visit dealerships who were participating in the federal program.
The program was a boon for Ford Motor Company, and 47 percent of consumers surveyed said that they were likely to visit a Ford dealership. A full 50 percent of respondents indicated that they would consider a Toyota due to its participation in the program.
Although the program took its toll on dealer inventories, automakers have moved quickly to replenish their stocks of popular Clunker program models. Ford, GM and Honda have all announced that they are increasing production.
The White House Council of Economic Advisors, in its preliminary analysis of the effect of the program, claims that it will create or save 42,000 jobs over the remainder of this year.