U.S. 'cash for clunkers' outpaces Canadian plan
Last Updated: Wednesday, August 19, 2009 | 7:25 PM ET
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New data showing the enormous popularity of the U.S. cash for clunkers program has focused more attention on the much less generous Canadian program.
The U.S. program gives Americans up to $4,500 US if they trade in an older, less fuel-efficient car for a new, more efficient one.
Sales of fuel efficient cars have jumped in countries where 'cash for clunkers' programs have been announced. (Carlos Osorio/Associated Press)
Automakers credit the program for recent big sales increases in the U.S. New figures show that 411,624 vehicles have been traded in under the program since it began three weeks ago.
Ford, Honda, Toyota and Chrysler have all announced production increases, citing the U.S. program's beneficial fallout. On Tuesday, GM announced it too would boost production at several of its factories.
New figures in the U.S. show that none of the top 10 vehicle models bought through the taxpayer-funded cash for clunkers program is made by GM or Chrysler — the two companies that taxpayers spent billions rescuing from bankruptcy.
Ottawa still mulling boost
Environment Minister Jim Prentice says the government is looking into whether to offer Canadian consumers more generous incentives to retire their old, polluting cars and buy new vehicles. A decision is expected in the next few weeks. A brief statement emailed to CBC News from Industry Canada said, "Our position hasn't changed."
The current Canadian program — touted as a way to reduce air pollution and greenhouse gas emissions — is being run with the provinces, so incentives vary across the country. Incentives include discounts on public transit passes, bicycles, memberships in car-sharing programs or $300 cash. The retired vehicles are turned over to scrap yards to crush and recycle.
The Retire Your Ride program, as it's called, has succeeded in scrapping about 12,000 vehicles since January — fewer than this year's target of 50,000. Analysts say the reward needs to be bigger to attract more interest. The Canadian Automotive Dealers Association suggested in April that an incentive of $3,000 "would work effectively to remove older vehicles in Canada."
In an interview last week with Ward's Auto, Ford of Canada CEO Dave Mondragon said the Canadian program was "not having [that much] of an impact."
Hyundai to top up federal program
In the absence of beefier rewards, one automaker has launched its own incentive to top up Canada's modest scrappage program.
Hyundai Canada announced plans Wednesday to offer cash incentives of up to $1,000 for buyers to scrap their old gas guzzlers.
Depending on the vehicle, customers who turn in their old clunkers for recycling will be offered $500 to $1,000 in cash that can be applied to the purchase of a new, more fuel-efficient Hyundai. The money would be in addition to other incentives.
The South Korea-based company said it's the first automaker in Canada to offer such an environmental incentive program.
Cash for clunkers is worldwide
Germany, Italy, Britain, Romania, Austria, the Netherlands, Spain and Serbia have all introduced their own versions of cash for clunkers programs. Germany offers a voucher worth almost $4,000 to anyone who trades in a car that's at least nine years old. Britain offers £2,000 ($3,600) to people who trade in a car that's at least 10 years old for a new one.
The programs have all proven to be enormously popular, although analysts say they just pull sales forward, leading to big sales drops once the programs are discontinued.
"All you're really doing is paying a consumer a fair amount of money to do something they already would have been doing in a matter of days or weeks or months," automotive analyst Dennis DesRosiers told CBC News.
The automotive website Edmunds.com said last week that interest in the U.S. cash for clunkers program already appeared to be slowing, based on its analysis of purchasing intentions. "If the current trend continues, vehicle sales could be back to pre-cash for clunkers levels by [Thursday]," an Edmunds.com analysis said.
The federal government says a quarter of the 20 million cars and trucks on the road in Canada predate 1996 — the year that Ottawa introduced more stringent emission standards.
It says pre-1996 models produce about 19 times more air pollutants than newer cars and trucks.
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