Summary
The program may be a spark for new car sales. 250,000 seems to be a small one with some important open questions. 1. Will workers with lower wages be able to get credit or to make the payments? 2. Do car makers have the inventory of vehicles with improved fuel mileage on hand to meet the improvement criteria? 3. What will happen after the incentive ends?
Analysis
The vouchers will help to reduce the price and improve affordability. This type of government sponsored program has worked in European countries, including England, Germany and Italy. It could help to spur sales in the US. However, there are several key issues that could counter the effort. 1. Will workers with lower wages be able to get credit or to make the payments? Union workers who made $28/hour are disappearing while their replacements make $15/hour. 2. Do car makers have the inventory of vehicles with improved fuel mileage on hand to meet the improvement criteria? 3. What will happen after the incentive ends? European sales typically spiked due to the incentive then were followed by a significant drop in sales for 6 to 9 months afterward as "payback" for the spike in sales. Perhaps it is better that doing nothing. Let's hope that it will have a net positive result.
