St. Louis, March 9, 2010 ??? Comprehensive consumer research released today by Maritz, a leading global provider of automotive research, demonstrates that the Cash for Clunkers program succeeded in creating significantly more incremental sales than previously estimated without negatively impacting future automotive sales.
Utilizing its New Vehicle Customer Study (NVCS), which is conducted year round, Maritz Research???s Automotive Research Group surveyed nearly 36,000 consumers who bought a new car or truck during the implementation of the Car Allowance Rebate System (CARS) from July to August 2009. It is the most comprehensive study of consumer response to the program.
The research findings provide strong evidence that Cash for Clunkers spurred consumers to buy or lease new, fuel-efficient automobiles without sacrificing future car or truck sales. Like previous National Highway Traffic Safety Administration (NHTSA) data that demonstrated CARS increased jobs and reduced greenhouse gases, these sales numbers are a solid indication that Cash for Clunkers achieved its objectives.
???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, PhD, vice president, Maritz Automotive Research Group. ???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.???
Cash for Clunkers Spurred More Than 500,000 Incremental New Vehicle Sales
The NVCS findings show that the Cash for Clunkers program created 542,000 incremental new car or truck sales, meaning that those auto buyers and lessees would not have existed without the incentive program. Previous estimates put resulting incremental sales at somewhere between 125,000 and 346,000.
Maritz??? analysis utilizing the NVCS reveals that of consumers acquiring a new vehicle (CARS and Non-CARS participants) in July and August 2009:
?? Only four percent of participants in the CARS program would have still purchased or leased a vehicle without the extra incentive.
?? Thirty-one percent took advantage of the incentive rebate specifically because of the CARS program.
?? Thirteen percent intended to take advantage of the incentive but did not qualify.
?? About half (52 percent) did not participate in CARS and never intended to.
According to government records published on www.CARS.gov, 677,000 vehicles qualified as CARS transactions. The Maritz study demonstrates that the vast majority (542,000) of consumers indicated that CARS was the main motivation for purchasing or leasing a vehicle when they did. Moreover, an estimated additional 223,000 vehicles sold during July and August 2009 were purchased by consumers who wanted to participate in CARS, but did not qualify, yet they purchased or leased a new vehicle anyway.
???The ???halo sales??? of 223,000 vehicles were an added bonus to the already solid results produced by the CARS program,??? Fish said.
CARS Did Not Mortgage Future Automotive Sales
The Maritz study also debunks concerns that CARS was mortgaging the future by stealing sales that would have occurred anyway at a later date. While experiencing a slight dip in sales in September 2009, most likely due to a shortage of auto dealer inventory, the Seasonally Adjusted Annual Rate (SAAR) from October through December 2009 shows that automobiles continued to sell at a higher pace than before the CARS program was implemented, according to statistics from the U.S. Department of Commerce???s Bureau of Economic Analysis.
Maritz??? NVCS also shows that Cash for Clunkers did not attract the ???normal??? new car buyer, but an unorthodox pool of consumers, including many used car owners, first-time car buyers, consumers who were trading in cars with more than 100,000 miles and buyers adding an additional vehicle to their family fleet. More specifically:
?? Typical CARS program buyers were more often first time new buyers (16%) than typical new car buyers (12%).
?? CARS buyers were more often adding to their household fleet (31%) than non-CARS buyers (22%).
?? More than 60 percent of consumers who bought a vehicle under the CARS program plan on driving their vehicles as long as possible, rather than replacing them every few years. This compares with 38 percent of non-CARS participants.
?? Fifty-eight percent of CARS participants were trading in vehicles they originally purchased used (versus 28% for non-CARS participants).
?? Nearly 80 percent of all trade-ins had more than 100,000 miles.
?? Half of trade-ins were more than 10 years old.
???These results provide strong empirical evidence that CARS did not impede future sales. Vehicles were sold to people who don???t normally buy them,??? concluded Fish.
Cash for Clunkers Creates Jobs, Not Just Sales
Not only do we now know the incentive program created sales that otherwise wouldn???t have occurred, a body of research also proves that Cash for Clunkers created jobs throughout the automotive industry, including those at manufacturers and their suppliers. According to NHTSA???s Report to Congress, CARS resulted in a $3.8 billion to $6.8 billion increase in gross domestic product and ???created or saved nearly 60,000 jobs.??? And, according to the Ann Arbor, Michigan-based Center for Automotive Research, 40,200 new jobs were created including about 11,000 in Michigan and Ohio alone (for a list of states where the most jobs were created due to CARS, please visit www.cargroup.org/pdfs/Cash_for_Clunkers_Report.pdf).
If Past is Prologue
Although the CARS program succeeded, the NVCS research provides insights for creating even stronger private or public incentive programs in the future:
?? Thirteen percent of consumers ??? largely female, younger, unmarried with lower household income ??? wanted to participate but could not because they misunderstood the criteria for trade-ins or the qualifications for new vehicles.
?? Generation X and Millennials more often than others fell into the category of ???wanting to participate but could not,??? likely because of misunderstanding the rules of the program.
?? Normally, about 36 percent of car or truck buyers finance through a manufacturer???s financing company. However, only 30 percent of CARS participants financed through the manufacturer???s financing company.
?? Brand and dealer loyalty were lower for CARS participants as well. Only 21 percent were brand (make) loyal and 8 percent dealer loyal. This compares to 40 percent and 23 percent for Non-CARS participants.
Cash for Clunkers Generated Sales Resulting in a Positive Impact on Energy Stewardship
Maritz???s research further supports NHTSA???s data on the positive impact CARS had on the environment and energy savings. According to the NVCS, half of all trade-ins were more than 10 years old and had more than 100,000 miles. Older vehicles such as these only averaged 15.8 miles per gallon and were replaced with vehicles averaging 24.9 miles per gallon, according to NHTSA, which estimates that ???the reduction in fuel consumption over the next 25 years to be 824 million gallons??saving roughly 33 million gallons annually.??? NHTSA also reports, ???The estimated reduction in carbon dioxide emissions and related greenhouse gases over the next 25 years is nine million metric tons, a reduction with an estimated social benefit of $278 million over 25 years (in 2008 dollars).???
About the Maritz Automotive Research Group
The Maritz Automotive Research Group (ARG) is one of the world???s leading providers of automotive consumer research. Based in Toledo, Ohio, the group also has offices in Detroit, Los Angeles, Nashville, Toronto, Hamburg and London. Maritz currently conducts customer satisfaction programs that cover 70 percent of the new cars and light trucks sold in the United States. In support of these programs, Maritz conducts more than one million telephone interviews and mails more than 40 million questionnaires each year. More than 17,000 North American and European automotive dealers have access to their customer satisfaction analysis and other research results on Web sites created and managed by Maritz.