Not-So-Big Three Winning Cash For Clunkers Sales War... Barely

We may earn a commission from links on this page.

The Cash For Clunkers program's clearly moved vehicles off the lot. With the Senate considering an additional two billion dollars, our question is: who's winning the Cash For Clunkers sales war? The answer: American automakers, by a nose. Here's why.

According to preliminary data of the 80,500 transactions logged into the Department of Transportation's system, approximately 47% of the sales are of vehicles from the not-so-Big Three, which just outpaces their overall share in the market of approximately 45%.


The program has clearly been good for Ford, giving them a year-over-year sales increase of 2.3% in July, their first since 2007. Ford's Sales Analyst George Pipas admitted to CNBC yesterday, "Cash For Clunkers put us over the top." Ford also has two of the top five most sold vehicles under the program as of Friday, with the Focus in first place and the Escape small SUV in fifth.

Both GM and Chrysler improved sales from the previous month with the Dodge Caliber and Chevy Cobalt making the list of most purchased vehicles. Additionally, it's been estimated more than half of the non-not-so-Big Three purchases were assembled in the United States.

The reason the not-so-Big Three are winning out? Anecdotal evidence suggests patriotism may play a factor, but for the moment that's hard to prove. The biggest correlation may merely be the brands and models of vehicles being traded in. According to the Department of Transportation, 83% of the trade-ins are trucks (or truck-based SUVs), with the Ford Explorer capturing six of the ten most traded in spots. Our bet is consumers are trading in their cars at the same place, or from the same automaker, they purchased them from originally. So under that litmus test, it may very well be that the Cash For Clunkers plan could be eroding U.S. automaker ownership share — a number that differs from overall market share but could reflect a trend of buyers moving toward non-domestic automakers in their next auto purchase, not their trade-in purchase.


That's not the only way foreign automakers are doing quite well under the program, with slightly more than half of the vehicles sold coming from foreign automakers. But, considering domestic automakers don't have the most fuel efficient vehicle choices on the road, the news is still slightly better for them that they're able to keep pace with their foreign competition.

Congresswoman Betty Sutton (D-OH), who was a cosponsor of both the original CARS bill and the $2 billion refresh, is supportive of continuing the program. "I am pleased that this program is working for the American people and will continue," said Sutton. "[T]he CARS program has proven to be a success. It immediately helps our dealerships, salesmen, consumers, the environment and our economy."


The long-term question is how sustainable is this growth? Not very. Estimates from indicate nearly 100,000 people could have been waiting for the program to begin, boosting initial demand. Without the program, they estimate there would only be 60,000 of these clunker deals likely occurring. If the program only encouraged people who were waiting to trade in then the long-term impact will be small.

Overall, the benefit of this program seems to be evenly split between domestic and foreign automakers, which, given recent class-dominance by foreign automakers in the small car segment, means it's actually a market share gain in small cars for the not-so-Big Three. However, the long-term effects of losing out on a great many of previously domestic owners isn't yet apparent.


But nevermind the automakers as the biggest benefits may be to the consumer, who are shedding "guzzlers" for more efficient cars. And if the "halo" effect of buyers coming to dealerships without clunkers truly works, it could have an impact well beyond the number of cars traded in.

AP Photo/Mel Evans