As the Senate nears a vote to extend the Cash For Clunkers program with another $2 Billion, they might want to consider the fact that the program is accelerating the domination of the Japanese Car companies.
According to a Reuters story published today:
“Toyota’s Corolla sedan overtook the Ford Focus as the best-selling vehicle in the “clunker” program. Toyota had two other passenger cars, the Prius hybrid and the Camry, in the top five. The Honda Motor Co Civic was No. 3.”
So 4 of the 5 models of cars being bought in the “Cash For Clunkers” program is going to Japanese car companies. I don’t know what percentage of the govenment money is actually making it to the American car companies, but it has to be a fairly small amount. If there’s only one model from an American-based car company in the top 5.
Now, I believe that at least some of these car models are manufactured in the US, even though the car company is based in Japan. So there is some econimic benefit to Americans in hose cases, even. But if the purpose of the “Cash For Clunkers” program is to support the American car industry, this isn’t exactly an efficient way to do it.
Further more, the article also notes that the majority of the cars being turned in are from the American car companies.
“Vehicles made by U.S. manufacturers accounted for all of the top 10 traded-in vehicles, which is to be expected since rebate terms require the older model get no more than 18 miles per gallon in most cases.”
I can see their point. Because 20 years ago the Japanese car manufactures had a much smaller market share, it would be expected that there would be fewer of those cars being turned in. And 20 years ago there were many more Japanese cars getting more than 18mpg than American. In any case, when you take both of those paragraphs together, what you see is an overall trend of people giving up their American cars in favor of cars from Japanese manufacturers. Car buyers are switching brands.
Not that there’s anything wrong with that. Every car I’ve owned has been a Honda and I can’t imagine switching. So I’m not about to say people shouldn’t be buying Japanese cars. Nor would I dream of saying that the Cash For Clunkers program should only subsidize the purchase of American cars. That would be grossly unfair.
My point is this. What exactly is the purpose of the Cash for Clunkers program? As I noted in an earlier post, the “green” benefit is marginal at best, especially considering the large piles of taxpayer money going into it.
And if the Cash For Clunkers program is accelerating the adoption of Japanese cars, isn’t this hurting the very car companies the program is intended to help?
And we’re going to spend $2 Bilion more on this program?