Ford expects stimulus talks with U.S. government, floats cash for clunkers idea

Ford is expecting to talk with the U.S. government about an automotive stimulus package to help the industry get back on track once the coronavirus pandemic subsides. Bloomberg reported the news, citing Mark LaNeve, Ford’s vice president of U.S. marketing, sales and service.

“We think some level of stimulus somewhere on the other side of this would help not only the auto industry and our dealers, which are a huge part of our overall economy, but will help the customers as well,” LaNeve says. “We’re in discussions about what would be the most appropriate.”

One of those solutions that’s already been brought up by Ford: cash for clunkers.

“Cash for clunkers was very effective at that time,” LaNeve says. “It would be nice to think we could have something equally as effective for 2020 when we get out of this because it was a great program.”

Maybe some of you are already cringing at the glowing praise for the old cash for clunkers program instituted in 2009. Despite being more popular than the government thought it would be initially, the lasting effects of that program haven’t all been rosy and positive. As new car sales plummet downward these days, it’s important that we don’t repeat the mistakes of our past to fix the problem.

The used car industry was hurt badly by the original cash for clunkers program. With thousands of used cars traded in and junked, the value of other used cars skyrocketed. As supply dwindled, that made previously cheap cars more expensive for the masses. It was especially painful for those with low income who relied on being able to purchase a cheap, used vehicle and couldn’t afford to take advantage of the program to buy a new car anyway. Many of the cheap, running used cars throughout the country had new homes in the scrapyard.

On the plus side, more people were able to purchase a fuel efficient and (likely) safer new vehicle. It’s no surprise to see Ford speaking positively about the program. After all, people went out and bought new cars, and some of them were Fords.

Late last year, Senate Minority Leader Chuck Schumer put forth a proposal with a similar idea to get more electric cars on the road. Folks would trade in their gas engine cars for an EV and America would toss in some amount of cash to cheapen the car. The sentiment and goal is great: Get more Americans into an electric car. However, history has already told us that it comes with problems, like the ones we listed above.

Automotive News reports that a Ford spokesperson elaborated on Ford’s plans to propose a stimulus package to Congress.

“The auto industry is America’s economic engine. We are encouraging Congress to look at a variety of ways to drive job creation, increase demand, support customers and provide long-term stability for the entire auto ecosystem.”

At this point, an automotive stimulus package may not be the priority. But as the crisis wears on, some aid and programs could be forthcoming. We’ll be watching to see how this one develops.

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