So after the UK’s vehicle scrappage scheme was hailed a success, what of the so-called “cash for clunkers” programme in the US?
The subsidy programme has helped Ford to its first increase in US vehicle sales since 2007 after it sold 158,838 vehicles in July – that’s an increase of two per cent on the same month last year. Even though corporate purchases of vehicle fleets continued to drop, the number of retail sales of Ford cars and pick-up trucks among the public leapt by nine per cent.
Meanwhile Ford’s US rivals General Motors and Chrysler also showed signs of modest improvement as their rate of decline slowed. General Motors’ July sales dropped 19 per cent year on year while Chrysler’s fell by 9.4 per cent – hardly something to celebrate but encouraging considering that in the previous months sales had declined by as much as 40-50 per cent.
The cash for clunkers scheme offers payments up to $4,500 for motorists that are willing to swap in their gas guzzling vehicles for more fuel efficient alternatives. Officially called the Car Allowance Rebate Scheme (CARS for short), it has proved so popular that public funding of $1billion dried up after one week. Since then, US Transport Secretary Ray LaHood has pressed the Senate for a further $2billion to replenish the scheme – this has already received approval from the House of Representatives.
However, despite the success, the Government’s intervention has been met with mixed reviews. Environmental critics want tougher criteria for the subsidies while industry commentators have expressed concern that the public money may merely be bringing forward the replacement of older vehicles, which would have happened eventually anyway.
