Friday, August 28, 2009

Cash for Clunkers Program: An Aftermath

The auto industry is one of the industries that has been hardly hit by the economic downfall. Some auto companies had closed down or undergone mass lay off just to avoid further losses.

To help revive the car industry, the government implemented a program called Cash for Clunkers.

Cash for Clunkers is a program whereby people are encouraged to buy new and more energy efficient cars in lieu of the incentives, rebates and other benefits given to them. This is done to boost car sales which would eventually help the automotive industry.

In Washington, the program generated about 700,000 new car sales giving the U.S. auto industry the needed push. The government collected a data stating that dealers submitted 690,114 sales totaling to $2.88 billion.

Others say, however, that the growth in sales may be short-lived. Some predicted that consumers may be regretting their clunkers purchases, especially since many buyers traded in paid-off vehicles in return for new cars financed through loans.

In a survey conducted by an automotive research firm CNW Research, out of 1000 Cash for Clunkers participants, 17 percent had doubts about their vehicle purchase after taking on monthly car payments of $275 to $350 per month.

On the other hand, the Obama Administration believed that the program was a major success by providing needed stimulus to the auto industry thus helping the economy.

Transportation Secretary Ray LaHood said that due to the program manufacturing plants have added shifts and recalled workers. In fact, Moribund showrooms were brought back to life. Moreover, consumers did not only contribute to the economy but to the environment as well by buying fuel-efficient cars.

Cash for Clunkers has its advantages and disadvantages. As to what effects are predominant could be discovered in time. As for now, one thing is clear. The auto industry is slowly recuperating.

If you have questions about the program and how it is going to affect your monetary status, engage the services of a business attorney who can enlighten you of the risks involved.