Mike Smitka
Mike Smitka Discusses "Cash for Clunkers"

The U.S. government launched its Car Allowance Rebate System (CARS), known more popularly as "Cash for Clunkers," on Friday, July24, and a Washington and Lee University economist who specializes in the automobile industry says the program is unlikely to have the sort of impact that similar programs in Europe have had.

Michael Smitka, professor of economics at W&L and author of the "Autos and Economics" blog, said that while Cash for Clunkers aims to boost car sales and improve the environment, he thinks most consumers will be disappointed in the results.

"The requirements for the program are very strict, with lots of lots of little details," said Smitka.

That contrasts with some successful programs elsewhere, he added, that make the pool of prospective buyers much larger by having fewer strings attached.

"Most of the people who will be trading in vehicles have to buy a new vehicle anyway," he said. "Consequently, the net addition to sales will be much less than the 250,000 vehicles that the program will cover."

 

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