There were several advantages to this program

The Cash for Clunkers Program was created in order to get older vehicles with low gas mileage off of the roads, while at the same time stimulating the new car industry. At the end of 2008 and continuing into mid to late 2009, U.S. new car makers faced one of worst environments in which they’ve ever had to do business. The economy was in a deep recession, which meant that many people were putting off new car purchases, decimating that sector.

To try and counter this, and with the side benefit of helping the environment and reduce the country’s dependence on foreign oil, the government created an incentive where new car buyers would receive a credit of $3500 or $4500 towards the purchase of certain new vehicles, if they traded in their existing high-gas-mileage autos. The amount received depended on the amount of net increase in miles per gallon between the old vehicle and the new one.

There were several advantages to this program, one of which is that during its tenure, new car dealerships saw an unprecedented demand for their products, which was a vast contrast to the business environment immediately preceding that time period. Many dealerships had to close their doors in late 2008 and early 2009,Kensington uggs, so the cash for clunkers most likely helped stave off more closures by creating increased demand for autos.

Another benefit to the program is that it has increased the pace at which older, gas-guzzling vehicles are retired off the road,Sadly to say, which is helpful in several ways. First, reducing the net age of the vehicles populating the nation’s roads can only make them safer, as older autos can often be unsafe for the drivers and those around them. In addition, the program required car buyers to buy vehicles that get a certain level of gas mileage, which not only helps the environment, but reduces the nation’s dependence on foreign oil.

Although there were several benefits to the Cash for Clunkers program, several disadvantages to the program were evident as well. To begin with, some might say that the program created an artificial demand for new vehicles during the time it was active, and was simply “borrowing” demand from the future. Already, there exists anecdotal evidence that business has been abnormally slow at new car dealerships during the period directly after the program ended. Also, while demand was increased for new cars, used vehicle lots suffered, as their sales were somewhat cannibalized by the increased demand for new vehicles. Some people who would normally purchase a used car decided to take advantage of the free tax money to step up to a new vehicle.

The Cash for Clunkers program has been a hot-button political issue during the past year, and it is not without its promoters as well as detractors on both sides of the aisle. While it served to increase sales of new vehicles during a time period of extraordinarily low demand, there is some question as to the price of creating such demand.