Cash for Clunker Trades Show 59 Percent Fuel Economy Boost, Hyundai Says
July 24, 2009

Hyundai Motor America said its early statistics on Cash for Clunker trades show an average 59 percent fuel economy gain between the clunker and the new vehicle purchased.

Hyundai became the first automaker to honor the government's Cash for Clunkers program- officially called Car Allowance Rebate System (CARS) -even though program rules were just released on Friday morning. At that same time, dealers began to sign up to administer the vouchers, which range from $3,500 to $4,500. Processing for the vouchers begins Monday.

Hefty Fuel Savings

Based on the 59-percent fuel economy improvement between the new and old vehicle of the early clunker trades, Hyundai estimates individual fuel consumption will decrease by 275 gallons per year, reducing fuel costs by nearly $680 annually at current gas prices.

Hyundai officials noted that as the CARS program kicks into high gear, the energy and cost savings could be considerable if these early trends hold for the 250,000 vehicle sales expected under phase one of the  program.

By Hyundai's calculations, annual fuel consumption in the U.S. could decrease by 69 million gallons, reducing spending by a total of nearly $170 million on gasoline and cutting CO2 emissions by more than 600,000 metric tons.
 
"While the figures are indicative of early trends only, it is clear that the program, at this stage, is very successful in getting old, low fuel economy vehicles off the road and replacing them with safer and greener vehicles," said Hyundai Motor America President and CEO John Krafcik. "We think these economic and environmental benefits are so compelling, that they will induce Congress to expand or enhance the CARS program past its current endpoint."

The program received $1 billion from Congress in funding and runs through November, or whenever the money runs out. Some buzz in Washington has the program being expanded with more funding beyond that point.

Clunkers Be Gone 

Hyundai's early experience with Cash for Clunkers shows clunkers truly are being removed from the road.

Hyundai reports that 86 percent of the initial trades taken were a truck, SUV or van, and those trade-ins were replaced with a car. The average age of a trade-in model was nearly 14 years old; the average odometer reading was more than 140,000 miles. The average "clunker" achieves about 16 miles per gallon according to EPA data, while the average new car sold under the program achieves more than 25 mpg.

Hyundai's data shows 32 percent of the trade-in models reported by dealerships were Ford vehicles, followed by Dodge at 23 percent. Lexus, Jaguar, and Mercedes-Benz were among the other brands delivered as "clunker" trades. Hyundai said that demonstrates both the broad appeal of the government program, and the changing nature of Hyundai's product line and buyer demographics. 

What Clunker Traders Bought

The Hyundai Elantra was the most popular model purchased under the CARS program, making up nearly 33 percent of sales. With manufacturer incentives and a full CARS rebate for a qualifying clunker" consumers can purchase a new Elantra for as little as $8,620, Hyundai noted.

Beyond Elantra, the Hyundai Sonata was the next most popular at 27 percent of clunker trade-ins, followed by the Accent at 19 percent.

In addition to being credited for the government's clunker voucher, Hyundai buyers are covered by Hyundai Assurance, which allows buyers to return the vehicle if they lose their income and the Hyundai Assurance Gas Lock program, which offers a year's worth of gas at a guaranteed price of $1.49 per gallon.

Boosting Hyundai Sales

Hyundai is benefiting as much from Cash for Clunkers as is the economy and environment.  

Hyundai began honoring the CARS incentives on July 2, by backing dealerships with short-term cash advances as the rules were being written for the program. Since then, the Cash for Clunker trades have accounted for about 11 percent of Hyundai's sales so far this month, the company said.

Edmunds.com forecasts that the Hyundai Group, which includes Hyundai and Kia, will be the only one of the Big Seven automakers in the U.S. to report a year-over-year sales increase for July. -- Michelle Krebs

Photo by Hyundai

The Hyundai Elantra was the No. 1 Hyundai purchased by people who traded in a clunker.

Posted by Michelle Krebs at 6:24 AM under Analysis , Companies , Featured | Comments (3) | digg this | Seed Newsvine

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