Question

The “Cash for Clunkers” program was one of the most talked about sales promotions of recent memory. As part of the government’s $3 billion effort to jumpstart sales at slumping auto dealerships, owners of old gas-guzzling vehicles received a $4,500 rebate if they traded in their “clunkers” for new fuel-efficient vehicles. Research the Cash for Clunkers sales promotion and have an in-class debate on what impact, if any, the stimulus program had on short- and long-term auto sales. Debate the environmental benefits of the program.

Answer 1

Answer:

The “Cash for Clunkers” program was one of the most talked about sales promotions of recent memory. As part of the government’s $3 billion effort to jumpstart sales at slumping auto dealerships, owners of old gas-guzzling vehicles received a $4,500 rebate if they traded in their “clunkers” for new fuel-efficient vehicles.

Debating on impact the stimulus program had on short- and long-term auto sales: It had severe impact on the short term sales for the cars because most of the consumer who wants to replace their old car and buy new car has already covered in this program and they will not plan for new car buy, as their requirements is completed with this program. Hence it had severe impact on the short term car sale business.

Long term car sale does not get major impacts due to this program because these cars sale program’s benefit will not last for long time and after some time, people will be in routine process of car sale and buy process. Thus we do not see that it had any major impact in long terms approach.

Though dealers, distributors are affected mainly in short term, as their sales will be down due to sudden hit with this program but in long run they will be with the same process and they will have similar sales for their program.

This program will have effect on economy in short term but on long term it will not have major impact on the economy for car sale business.

Debating the environmental benefits of the program: This is the biggest benefit that this program resulted in terms of benefits to the environment from the pollution, from the old cars, which are less efficient and producing larger pollutants in the environment. Environment is benefited significantly and it reduced the effective utilization of the fuels as well because it increased the mileage for new cars, thus increased the output from the fuel consumptions. The intention of this program is to improve environment condition by reducing the pollution due to old cars usage.