Who's Cashing In on All Those Clunkers?

In a recent Compete blog, we discussed the cash for clunkers government program CARS (Cars Allowance Rebate System) and the amount of online attention it drew from new vehicle prospects, both in terms of unique visitors to the cars.gov site and to OEM sites. That attention, combined with attractive incentives to junk an old gas guzzler and replace it with a newer, more fuel efficient model contributed to a July sales surge of more than 15% month-over-month. While sales remained down compared to a year ago, the program proved to be a much needed shot in the arm for an industry struggling to get back on its feet.

But how much of that increase in OEM site traffic can we tie to back to the cash for clunkers program? Taking a deeper look at Compete’s online panel of consumers, we were able to track the number of consumers who searched for information on cash for clunkers (or some variation of clunkers) during the month of July. Not surprisingly, the number of searchers sky-rocketed during the last two weeks of the month with 1.2 million searching for information during the last week alone.

As the number of clunker searchers was going through the roof, a significant proportion of those people also visited an auto OEM site. In fact, more than one-third of overall searchers also visited an OEM site during the last two weeks of July, reaching 400,000 the final week. But the lift among OEM visitors was not as great as the overall lift among clunker searchers in general. That suggests there was a lot of curiosity in the program that did not translate into engagement with an auto manufacturer, meaning the sales contribution may have been less than it could have been.

So who benefited from all that clunker traffic? Certainly, you’d expect those automakers known for their fuel efficiency such as Toyota (TM) and Honda (HMC) to get the attention of clunker searchers and in fact that was the case as those two brands led the way. A whopping 42% of clunker searchers also visited toyota.com, nearly three times the rate of Honda. But that’s not too surprising since when someone Googled “cash for clunkers” the number one sponsored link was toyota.com/cashforclunkers. And as a measure of Toyota’s success, they had 3 of the top 5 models purchased as part of the program – #1 Corolla, #4 Prius and #5 Camry.

Taking it a step further and comparing clunker search share to a brand’s Share of Market Interest (a Compete measure of a brand’s share of market-wide shoppers) Toyota and Dodge interest associated with the program outperformed on their ability to attract clunker searchers. Honda and Nissan (NSANY) performed on par while Ford underperformed versus its shopping share

Dodge’s performance is of special interest since it doesn’t necessarily have a reputation for fuel efficiency and it doesn’t offer any hybrid models. However, Chrysler offered incentives that matched the cash for clunkers incentives which allowed them to effectively piggyback on the program. This likely helped drive consumer interest in Dodge as well as the other Chrysler brands as both Chrysler and Jeep searches also exceeded their SMI.

Ford is a different story. Its SMI has been driven to a record high 22% on the growth of the 2010 Fusion and recently launched Taurus. Yet just 15% of clunker searches also visited fordvehicles.com. It appears that while clunker searchers where interested in fuel economy, Ford shoppers have been more interested in the company’s new models.

While cash for clunkers is no doubt having a short term impact on auto sales, the real question going forward will be around its long-term effects, especially now that the program has been extended. These programs – like the assurance programs launched earlier in the year - tend to have their greatest impact in the first month of two and then taper off. And while July sales were up month-over-month they still trailed compared to a year ago. The industry’s struggles are far from over but cash for clunkers provides a needed boost. As buyers are pulled forward and inventories continue to fall, keeping the sales momentum going through the end of year will be a challenge. To best capitalize on cash for clunkers and similar tactics, automakers need to monitor overall brand and model demand as well as keep pace with search dynamics and how it drives that demand.

Comments

[PNG:]

The Feds are over their eyeballs in red ink and now they want the public to do the same by getting in debt more, instead of living within their means. We got in this mess due to everyone wanting to "keep up with the Jones's, new house, two new cars and never thinking how to pay for it.

I have a 04 Crown Vic.gas milage in town 19/20 & on the interstate 26.
Car is in very good mechanical shape and NO PAYMENTS. I use 16 gal gas a week. What is the incentive to trade in and pay out 400 - 600 a month in car payments. Gas can go to 4.00 - 5.00 a gallon and I'de still make out better than people getting in debt for hybrids for 30 to 45K and if they don't drive these vehicles right, gas milage still wont' be that great.

Aug 11 10:58 PM

[User 469130:]

The program requires the scrapping of your eligible trade-in vehicle, and that the dealer disclose to you an estimate of the scrap value of your trade-in. The scrap value, however minimal, will be in addition to the rebate, and not in place of the rebate.

Henry
Blogger
cashforclunkersfacts.info
www.cashforclunkersfac...

Aug 12 02:02 AM

[kmi:]

The intent of the program appears to be both a economic stimulus - to which end encouraging consumption has value and since credit has been heavily withdrawn from the consumer it can be assumed only those with decent credit are buying with it - as well as energy security by encouraging MPG increases in the existing automotive fleet (in particular getting some SUVs and trucks off the road which were so popular over the last 15 or so years).

An assessment of the program should probably consider both. The 'green' folks wanted more focus on efficiency, the stimulus folks don't like the 18mpg min, and I don't like that there was no requirement for 'domestic or domestically produced.'


On Aug 11 10:58 PM PNG wrote:

> The Feds are over their eyeballs in red ink and now they want the
> public to do the same by getting in debt more, instead of living
> within their means. We got in this mess due to everyone wanting to
> "keep up with the Jones's, new house, two new cars and never thinking
> how to pay for it.
>
> I have a 04 Crown Vic.gas milage in town 19/20 & on the interstate
> 26.
> Car is in very good mechanical shape and NO PAYMENTS. I use 16 gal
> gas a week. What is the incentive to trade in and pay out 400 -
> 600 a month in car payments. Gas can go to 4.00 - 5.00 a gallon and
> I'de still make out better than people getting in debt for hybrids
> for 30 to 45K and if they don't drive these vehicles right, gas milage
> still wont' be that great.

Aug 12 07:28 AM

[Midas1:]

Domestic or domestically-produced? The Ford Fusion is built in Mexico. The Toyota Camry is made here, as well as some of the Corollas. Honda also builds the Civic here. Toyota and Honda are much more domestic than what many consider "domestic".

Aug 12 11:43 AM

[viktor:]

Program is a disappointment for some who want to use it. The CARS web site clearly states that a vehicle needs to licensed and insured for 1 year prior to any attempts to turn it in. However, it does not state anything about that vehicle needing to be under the same owner. I have a vehicle that gets 13mpg and would like to turn it in but have only owned it since January, prior to our president taking office and prior to any hint of this program. While I could provide proof of insurance and title for many years prior to my purchase of this vehicle, it doesn't qualify. Groan, another 'rule' / loop hole.

Aug 12 01:57 PM

[qw:]

Agree, in this day and age, not many vehicles manufactured by any auto makers are truly 100% domestic, but profits made by GM and Ford stay in the US versus going overseas for Toyota, Honda, etc.

For model year 2008, 85% of vehicles sold by Ford in the US were assembled in the US versus 46% by Toyota.
Also, domestic content of Ford vehicles in 2008 was 70% versus 41% for Toyota.

Similar statistics exist for GM where 84% of vehicles sold were assembled here and had 75 % US content.

Aug 12 04:08 PM

[BIG GEORGE1975:]

IF YOU LOVE YOUR COUNTRY AND YOUR FREEDOM, THEN GIVE BACK TO THE COMPANIES THAT HELPED END WWII. WHEN THE JAPS BOMBED US, THE BIG THREE WERE THERE TO BUILD THE MUCH NEEDED PLANES,BOMBS ECT..
THAT HELPED PUT AN END TO WORLD WIDE SLAUGHTER. I DON'T THINK THAT TOYOTA OR HONDA PLANTS BUILT HERE WOULD BE OF ANY HELP IN A FUTURE WAR AGAINST THE UNITED STATES.


G.J.I.

Aug 12 06:50 PM

[A real Amer...:]

I agree also, be an AMERICAN and BUY AMERICAN, keep our dollars in AMERICA and support AMERICAN companies.Did you people forget Pearl??


On Aug 12 04:08 PM qw wrote:

> Agree, in this day and age, not many vehicles manufactured by any
> auto makers are truly 100% domestic, but profits made by GM and Ford
> stay in the US versus going overseas for Toyota, Honda, etc.
>
> For model year 2008, 85% of vehicles sold by Ford in the US were
> assembled in the US versus 46% by Toyota.
> Also, domestic content of Ford vehicles in 2008 was 70% versus 41%
> for Toyota.
>
> Similar statistics exist for GM where 84% of vehicles sold were assembled
> here and had 75 % US content.

Aug 12 08:25 PM

[A real Amer...:]

I agree also, be an AMERICAN and BUY AMERICAN, keep our dollars in AMERICA and support AMERICAN companies.Did you people forget Pearl??


On Aug 12 06:50 PM BIG GEORGE1975 wrote:

> IF YOU LOVE YOUR COUNTRY AND YOUR FREEDOM, THEN GIVE BACK TO THE
> COMPANIES THAT HELPED END WWII. WHEN THE JAPS BOMBED US, THE BIG
> THREE WERE THERE TO BUILD THE MUCH NEEDED PLANES,BOMBS ECT..
> THAT HELPED PUT AN END TO WORLD WIDE SLAUGHTER. I DON'T THINK THAT
> TOYOTA OR HONDA PLANTS BUILT HERE WOULD BE OF ANY HELP IN A FUTURE
> WAR AGAINST THE UNITED STATES.
>
>
> G.J.I.
>
>

Aug 12 08:29 PM