Business Trends

‘Cash for clunkers’ proposal hurting the U.S. Auto Industry

In Uncategorized on June 3, 2009 at 11:56 pm

Hyundai Motor America has released survey data showing that as of May 29 at least 38 percent of potential new car buyers in the U.S. are aware of a pending fleet modernization ‘cash for clunkers’ program, and 11 percent of car buyers are delaying their purchases until this legislation is passed or defeated.

This represents as many as 100,000 lost industry sales each month due to uncertainty around this program.

“With sales in the U.S. auto industry forecast at the lowest levels in 26 years, it’s imperative that we move forward with this stimulus bill,” said Hyundai Motor America President John Krafcik.

“The auto industry makes up 10 percent of the consumer portion of the country’s gross domestic product. Any stimulus to the auto industry will make a major improvement in the overall U.S. economy, which remains severely depressed,” said Krafcik.

“The longer this bill, which is so important to the U.S. economy, remains stuck in Congress, the greater the pressures placed on all aspects of the U.S. automotive industry – from suppliers to manufacturers to dealers. We urge Congress to move quickly so that American consumers can benefit from this program during the peak summer selling season,” said Krafcik.

Nearly half of all vehicles sold by Hyundai Motor America are manufactured in the United States at Hyundai Motor Manufacturing in Montgomery, AL. In total, Hyundai directly employs more than 5,000 people in the U.S., with facilities in 14 states across the country. Including its almost 790 dealers and suppliers, Hyundai has created more than 35,000 jobs in the United States.

The ‘cash for clunkers’ program aims to stimulate demand for American cars by providing federal vouchers–up to $4,500–for people who trade their old, inefficient car for something ‘greener’ with better mileage. The cars must be American-made, however foreign brand cars may qualify if they’ve been manufacturerd on U.S. soil.

According to industry research firm IBISWorld, revenue in the New Car Dealers industry will have decreased by an annualized real rate of 6.6%, falling from $758.3 billion in 2004 to the expected $540.1 billion by 2009.

  1. Asinine bill. All it does is drive up the cost for the vast, vast majority of Americans who don’t own one of these ‘clunkers’. We’ll be putting off our new car purchase until prices come down.

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