Cash for Clunkers Driving Consumers Towards Hybrids & Fuel-Efficiency

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cash-for-clunkers-honda-civic-stimulus.jpgBy all accounts the cash for clunkers incentive program has exceeded all expectations in both volume of sales, as well as answering skeptics by getting fuel inefficient vehicles off the road.

The new vehicles being purchased average nearly 10 mpg higher, saving nearly 4 million barrels of oil per year and eliminating the production of tons of greenhouse gases.

More importantly, the program and its surrounding attention seems to have driven consumers towards hybrids and fuel efficient vehicles even more than a 50 cent spike in the price of gasoline. According to Brian Benstock, the VP and GM of Paragon Honda and Acura, the program is also introducing new customers to imports. Benstock said the program has reversed the ratio of domestic/import trade-ins at his dealership. Previously about 70 percent of his customers were trading one import (mostly Hondas) for another. Now it’s the opposite: 70 percent of people walking in the door are swapping American made autos for Hondas.

The simple reason for this switch — no Hondas qualify as clunkers under the program, so customers now Benstock’s talking to customers who previously bought American SUVs and pickups. He said the Honda Civic (37 percent of sales) is the hottest seller, followed by the Accord, and then the Insight hybrid. Paragon ran out of Civic Hybrids a few weeks ago, so for now his sales people are putting people in standard Civics by touting its fuel efficiency and adding incentives. He expects to have more Civic Hybrids by the end of the month.

Sales overall are nearly back to “pre-recession” levels Benstock says, with just as many additional customers who aren’t getting the cash-back as who are. He admits that this stimulus has “done exactly what it was supposed to do — stimulate sales,” but that at some point auto makers have to take over in generating sales on their own.

Ford and GM have also seen a strong increase in sales, while the impact at Chrysler has been more modes.

The Senate will likely push through another $2 billion to extend funding for the program. Benstock says the “right” vehicles are being driven off the road through the program. Most of the vehicles are older SUVs, minivans and trucks. “They’re junk.”

American consumers have proven that with the right incentives — monetary in nature — they’re willing to buy more fuel efficient vehicles. The lesson for automakers (especially Detroit) is that with Congress and gas prices leading the way, the shift to fuel efficiency will continue.

This article originally appeared on Matter Network.

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