Is Cash for Clunkers Saving Ford?

Cash for clunkers is a stimulus program that offers government vouchers toward a new car for consumers. The program is designed to allow consumers to trade in older vehicles with 18 mpg or less and receive a voucher for a new vehicle with better gas mileage. A 4 mpg increase is good for a $3500 voucher. An increase of 10 mpg is good for a $4500 voucher.

The program is supposed to help stimulate the economy and bring business back to the automakers by encouraging new car sales. Automakers would then be able to increase output and see more revenue come in which could slow the job loss efforts in Detroit. So far the program has helped. Ford has seen business spike as July gave Ford its first year over year increase since November 2007. Sales have risen in all of its brands.

The program could be halted should the Senate fail to approve a $2 billion funding effort. Failing to keep this program funded could cause a return to the previous pessimism we felt toward automakers for the first half of the year. This is one of the fast acting stimulus programs we have been able to see. It also seems to be one of the only programs that is actually having a direct impact on consumers. Should we really stop this program now after we have seen it grow and inject money into the economy?

Failing to refund this program could be more devastating than we think for the automakers. Some are barely hanging on. Taking away incentives will only prolong the inevitable for the smaller companies out there. If Congress comes through and is able to make a smart decision, an investment in the automakers could make you some quick cash money; however, that would be pure speculation. Be patient and do not act prematurely on a trade like that. Wait for Congress to give full support.