Cash for Clunkers versus the car donation industry

When the Cash for Clunkers program was first announced by the Obama administration in 2009, many news sites, blogs, and car industry related websites, wrote articles predicting the effect the program might have on car donation charities.

Two years later, we’ve gone back and dug through our data to answer the question. The results are pretty dramatic.

Did Cash for Clunkers have a negative effect on donations of vehicles to charities?

In order to accurately portray the numbers, it is important to point out that car donations have been dropping dramatically in the last two years as a result of two important factors. The first is the downturn in the economy. Consumers are holding on to old cars a little longer, perhaps spending a little more at the mechanic and a little less at the car dealer. The second factor is rising metal prices which causes people to sell their car directly for parts or for recycling rather than donating it.

We have taken the top ten cars cashed in for the Cash for Clunkers program and calculated the percentage of those vehicles for total donations in the years 2008, 2009, 2010, and 2011 up until September 23rd.

According to U.S. News the top ten cash for Clunkers trade ins were:

  1. 1998 Ford Explorer
  2. 1997 Ford Explorer
  3. 1996 Ford Explorer
  4. 1999 Ford Explorer
  5. Jeep Grand Cherokee
  6. Jeep Cherokee
  7. 1995 Ford Explorer
  8. 1994 Ford Explorer
  9. 1997 Ford Windstar
  10. 1999 Dodge Caravan

Because the program took place in 2009, we would expect donations of these vehicles to begin to drop off in 2010, the next year. However, as can be plainly seen from the following chart, 2010 showed only a very small drop of less than .004%, statistically – zero.

Cash for Clunkers car donation year to year chart

But one important number does stick out. Donations are expected to rise as these cars age. In fact, in 2011, the percentage jumped by almost .3%, a pretty substantial amount. And in 2009, we saw a jump of over .2% in the percentage of donations of these specific vehicles.The 2010 numbers are not significant because of what happened that year, but rather because of what didn’t happen. 

More importantly, after running some numbers on the cars.gov trade in vehicles report, which can be downloaded here, we’ve calculated that almost 85% of trade ins were domestic made cars. And our numbers clearly reflect a severe drop off of domestic car donations in 2010 and even deeper in 2011 to date.

Percentage of American made cars donated

These numbers show a clear dramatic drop in car donations as a direct result of the Cash for Clunkers program.

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