The US car scrappage scheme has been overwhelmed with applicants. The scale of demand has forced the administration to stop the scheme on Monday, as it became clear that the $3 billion allocated to pay for the cash giveaway may not be enough.
Apparently, the scheme was "overwhelming and overnight success". Forgive my skepticism, but it is hard to see how a scheme designed to give $4,500 away to every car buyer could fail.
However, what happens next? The surge in demand will fade away, leaving car manufacturers pretty much where they started. The US taxpayer will be left with the bill for paying for the ridiculous scheme.
From the FT....
The US cash-for-clunkers car scrappage scheme has become a victim of its own success, with the government announcing on Thursday that the incentives will come to an end on Monday evening, just a month after they were introduced.
The decision was taken to ensure that payments under the scheme do not exceed the $3bn allocated by Congress. A senior administration official described the scheme as “an overwhelming and overnight success – so much so that we need to wind this programme down”.
By Thursday, the transportation department had recorded 457,000 transactions, worth $1.9bn in rebates.The official said that “the over-riding objective [in ending the programme] was to be conservative and to provide an adequate window for a soft landing”.