Cash for Clunkers 2.0? Car industry will need incentives to help recovery, analysts tell Boom Bust
Many auto majors are reopening their facilities after long shutdowns triggered by the coronavirus pandemic, but the demand for cars might not pick up as quickly as they hope amid a dire economic situation.
“Believe me, they want to sell cars and there's gonna be incentives to get these cars sold because people are gonna be getting check stimulus around the world. And they're hoping and praying that they are going to use that to purchase a vehicle,” auto industry expert Lauren Fix told RT's Boom Bust.
However, the $1,200 checks the US government provided as part of its massive program to keep the economy afloat are unlikely to be spent on a purchase like this as people need cash for essential items like groceries, John Quelch, Dean of Miami Business School, noted during the discussion.
“Using those checks, and by the way the checks aren't that big in the first place, to subsidize the purchase of a new car – that's pretty unlikely,” the professor said.
Moreover, governments around the globe need new incentives like those introduced after 2008 to boost the depressed demand.
“The situation is reminiscent of the situation in 2008, the Great Recession, when the US government initiated the well known Cash for Clunkers program,” he said, referring to a $3 billion initiative aimed at motivating people to trade in their older car for a new one.
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