Cash for Clunkers: more sales than previously thought
Comprehensive consumer research just released by Maritz Automotive Research Group reported that the Cash for Clunkers program created a great deal more vehicle sales than previously estimated without negatively impacting automotive sales for the future. In fact, of those surveyed, only four percent said they would have bought or leased a vehicle without the CARS incentive.
With the help of the Maritz year-round New Vehicle Customer Study (NVCS), the research firm surveyed nearly 36,000 consumers who traded in their clunker for a more fuel-efficient new car or truck in July or August 2009. The findings of the study were that Cash for Clunkers was the impetus behind 542,000 incremental new vehicle sales, exceeding by far the previous estimates of 125,000-346,000 new cars or trucks sold.
“With such a large sample size, the NVCS study now offers the best and most robust data available as to the impact of CARS on automotive sales,” said Dave Fish, VP, Maritz Automotive Research Group, in the announcement. “Our findings not only provide strong evidence that many more vehicles were sold as a direct result of the incentive program than were previously estimated, but they also largely debunk the myth that Cash for Clunkers mortgaged future car and truck sales. In fact, the program resulted in sales of vehicles to people who don’t normally buy them.”
What the study did not address, or at least did not report addressing, is how many of these financed autos are still being paid for, and on time.
Microsoft ends Bing double cashback early
Microsoft just announced the early end of its double-cashback Bing shopping promotion. Publishers and broadcasters with online marketplace products would do well to explore the concept further, for its cancellation prior to the scheduled August 30 deadline is due to massive response. This campaign, as well as the Cash for Clunkers success tell us that consumers will buy – even during hard times – with the right money-saving inducement.
“Due to an overwhelming, positive response from our Bing cashback shoppers, we’ve now closed our limited time back-to-school promotion where Microsoft increased the percentage of cashback rewards on behalf of retailers,” read the announcement. Some retailers had already ended their own participation – the sales were that numerous!
The cashback campaign itself might not be perfected as yet, however. One TechCrunch commenter, who dubbed herself Bing Merchant said that “Bing Cashback Engineering is absolutely horrible. It has problems crawling merchant feeds and indexing product for its shopping search.” Yes, getting the mechanics right is crucial. How Bing cashback works.
Cash for Clunkers spinoffs
Despite some early confusion and obstacles, it’s clear that the Cash for Clunkers program has been a boon to auto dealers in the United States. While “parting out” firms complained that the requirement that clunker engines be siezed up when traded in cost them money, wasn’t that the ecological point of the program?
Now that the CARS program is about to expire, clones and offshoot programs may be emerging – one already has. When the story broke that dealers were pulling out of the CARS program due to slow federal government payments, General Motors stepped in to make the payments to its dealers and keep them taking the clunkers as trade ins. Now, there’s AutoStimulusPlan.com – a program that includes 79 U.S. dealerships so far. Automotive News gave us the first glimpse of the plan.
Begun by Sean Wolfington, co-founder of Level 5 and Tier 10 Marketing in Dulles, Va, the program primarily includes larger auto dealerships, as many small dealerships have run out of inventory. The dealer program has fewer restrictions than the government plan. For example, leases can be for terms shorter than the federal 60-month minimum and there is no ceiling on the new vehicle price. The dealers require that the vehicle being traded be older than a 2006, be in working condition, and have been owned and registered by the new car buyer for at least six months. The new purchase must improve the mpg by at least two miles, though there is no minimum mpg for either vehicle, and if the improvement is 5 mpg or more the trade-in bonus improves.
We talked in CIR 10.15, August 6, 2009, about the obstacles for auto dealers in this economy – red flag rules and tightening bank funding – and encouraged publishers to look for ways to help auto dealers. Well, here is one. Local publishers can help bring their DMA’s auto dealers together for their own AutoStimulusPlan.com, or classified networks can expand this concept beyond the local region. It may mean offering the publisher’s site as the online home of the project, or providing free advertorial content about the promotion with added paid advertising opportunities. It might mean hosting the planning meetings. We’re not sure. But it’s clear that auto dealers have benefited from Cash for Clunkers and they don’t want to see the concept die. Helping them keep it or something similar alive could be about boosting automotive publishers’ bottom lines as well.
It’s official – buy your GM car on EBay
Cash for Clunkers – not everyone singing praises
As the federal Cash for Clunkers program, first reported by AIM Group June 23, gets ready to roll out it’s picking up auto industry detractors as well as supporters.
AutoTrader.com and NADAGuides.com have collaborated to place a tool on both their Web sites that will help consumers with the program. These online tools will tell car shoppers if their current vehicle qualifies for the program and list for them the qualifying new vehicles, with the rebate amount that could be applied to their purchase. What alters the rebate amount from the low of $3500 to the high of $4500 are the type of vehicle chosen to purchase and the difference between their old “clunker’s” miles per gallon (mpg) and that of the new car. This is a smart, traffic-inducing tool and one that auto dealers would be wise to emulate for their own sites.
Naysayers of the government program, now renamed CARS (Cash Allowance Rebate System), caution that few American car owners will qualify or will really benefit from the program. The main problem, according to Peter Valdes-Dapena, senior writer for CNNMoney.com, is that the $3500-$4500 the federal government is offering as a refund is in lieu of a trade in – not in addition to one – and some of these old cars would bring that or more in trade-in value without this program. The other concern shared by several including yours truly is that people who are driving old clunkers worth $4500 or less may well be doing so because they really can’t afford to take on car payments.
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