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Another Cash for Clunkers Program? Wish Again.

Tuesday, 19 Jan 2010 | 11:07 AM ET
Car Allowance Rebate System
Car Allowance Rebate System

It is a suggestion that continues to pop up on a regular basis: The U.S. should have another Cash for Clunkers Program. Don't laugh, it's an idea that some in the industry continue to push with regularity. While their intentions and hopes are understandable, it's an idea that won't become reality.

There is no doubt Cash for Clunkerswas a highly effective stimulus plan not only for the auto industry but also for the American economy as a whole. It's not a stretch to say it turned out to be more successful than anyone predicted. But that doesn't mean the program should have an encore. Why? Quite simply because the auto industry is no longer in such dire shape that it needs billions pumped in to breathe new life into automakers. Compared to the spring of last year, the economic state of the industry has improved dramatically.

Supporters of another Cash for Clunkers Programargue the first program was a huge shot in the arm for the economy and a repeat would help the weak jobs market. Fair point. They also believe the auto recovery is a fragile one and there are still many small firms, especially suppliers, hurting and in need of a boost. I don't disagree that many of these small parts suppliers are hurting. Their revenues are a down considerably from what they were a few years ago. That said the industry is gradually recovering.

I don't dispute another Cash for Clunkers Programwould likely help the economy and jobs market. But also don't sense the type of support for "clunkers 2" that we saw with "clunkers 1". At the Detroit Auto Show, many executives shrugged their shoulders when I asked them if they thought we would see clunkers return. Furthermore, many said pushing for another stimulus program was low on their priority list. The focus right now is fostering the recovery in auto sales and for many firms getting back in the black.

As much as another Cash for Clunkers Programwould likely bring folks back in the showroom and spark sales later this spring or summer, I just don't see it happening.

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  • Phil LeBeau is a CNBC auto and airline industry reporter based in the Chicago bureau and editor of the Behind the Wheel section on CNBC.com.

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