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Cash For Clunker (US CARS PROGRAM)

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Wenyi Yan, MBA
Wenyi Yan, MBA

In 2010 US Government ran a program (C.A.R.S/ cash for clunker) during which consumers turned in gas guzzlers and bought nearly 700,000 more fuel-efficient vehicles in fewer than 30 days. Transaction data is available through NHTSA website.

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CASE STUDY CASH - FOR - CLUNKERS WENYIYAN WYYWENYI@GMAIL.COM (408)-858-6259
INTRODUCTION Program: 2009 U.S. Cash - for - Clunkers Encourage to retire old and lower MPG vehicle and purchase higher MPG vehicle Duration: July and August 2009 Objective: Stimulate U.S. Economy Put more fuel-efficient cars on the road Incentive: $3,500 or $4,500 credit
KEY DATA Duration: 30 days Number of Trade-In Vehicles: 677,984 Government spent (incentives): $2.8 Billion Total sales (MSRP) of New Vehicles: $15 Billion (14.42 trillion GDP in 2009) (0.1%GDP) National Coverage: 55 Areas (50 States + 1 District + 4 Insular areas)
QUESTION Identify the 10 most successful states and the 10 least successful states. Study the trade-in behavior of west coast consumers against consumers from other areas. Study the behavioral patterns of consumers purchasing new vehicles. Evaluate the conclusion wildly successful from government.
METHODOLOGY Step 1: calculate the average MPG of trade-in vehicles in each state (MPG-old) Step 2: calculate the average MPG of new vehicles in each state (MPG-new ) Step 3: calculate the MPG % increase. (MPG-new MPG-old) / MPG-old Step 4: sum the total trade-in vehicles in each state Step 5: get the total number of registered vehicles in each state (census.gov) Step 6: calculate the trade-in coverage ratio in each state number of trade-in vehicles/ registered vehicles eg: California MPG % increase = 66% Trade-in coverage ratio = 0.22% Data Point of California CA(66%, 0.22%)
METHODOLOGY Y-Axis: Trade-in Coverage Ratio origin : ( Avg x, Avg y) Successful Area Least Successful Area X-Axis: MPG % Increase 55 areas of data points Plot 55 areas of data points in the quadrant X-Axis: MPG % increase Y-Axis: Trade-in Coverage Ratio Origin: Average of MPG % increase in 55 areas Average of Trade-in Coverage Ratio in 55 areas First quartile -> best performance Third quartile -> worst performance Origin (59%, 0.27%) California(66%,0.22%) California (66%, 0.22%)
Y- Axis: Trade-in Coverage Ratio: Max: 0.60% Min: 0.01% Avg: 0.27% Median: 0.26% X- Axis: MPG % Increase: Max: 66.08% Min: 51.15% Avg: 58.57% Median: 57.73% Threshold Line: Slope of Line: K = Y / X (Max Trade-in - Min Trade-in Ratio) (Max MPG % - Min MPG %)
Successful States: Oregon Colorado Virginia Minnesota Connecticut Maryland Rhode Island Vermont Maine New Hampshire Least Successful States: Georgia South Carolina Hawaii South Dakota Arkansas Alabama Alaska Mississippi *District of Columbia Wyoming
State Performance by MPG & Trade in Coverage (Geographic Visualization)
State Performance by Sales Successful States: California, Texas, New York, Florida, Illinois, Pennsylvania, Ohio, Michigan, New Jersey, Virginia Least Successful States: *District of Columbia, Wyoming, Alaska, Montana, Hawaii, North Dakota, Vermont, South Dakota, Rhode Island, Delaware
THE PERFORMANCE OF WEST COAST CONSUMERS
MPG % increase in West Coast and other areas *West Coast refers to the states of California, Oregon and Washington. 64.7% 58.2% 54.0% 56.0% 58.0% 60.0% 62.0% 64.0% 66.0% West Coast Other Areas % MPG increase 0.076% 0.006% 0.000% 0.010% 0.020% 0.030% 0.040% 0.050% 0.060% 0.070% 0.080% 0.090% West Coast Other Areas % Trade in coverage Trade-in Coverage in West Coast and other areas West Coast consumers purchased more fuel efficient vehicles than other areas. MPG % increase in west coast is higher than other areas by 14%. Trade-in ratio coverage in west coast is 11 times grater than other areas. MPG / Trade-in Ratio
More percentage consumers in other areas switched from trucks to passenger cars. 81% 63% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% % truck in Trade-in Vehicle in West Coast % truck in New Vehicle in West Coast Trucks 86% 42% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% % truck in Trade-in Vehicle in Other Areas % truck in New Vehicle Other Areas Trucks In west coast, there are 81% trade-in vehicles which are trucks. In new purchased vehicles, there are 63% are trucks. 18% consumers switched from trucks to passenger cars. In other area, there are 86% trade-in vehicles which are trucks. In new purchased vehicles, there are 42% are trucks. 44% of the consumers switched from trucks to passenger cars. Type of Vehicles
4% 61% 9% 26% West Coast EU Japan Korean US 3% 43% 12% 42% Other Areas EU Japan Korean US West coast consumers like to buy Japanese brand vehicles than other areas. 61% consumers purchased Japanese brand in west coast. Consumers in other areas bought more US brand vehicles than west coast. 42% consumers purchased US brand in other areas. Brand of Vehicles
BEHAVIORAL PATTERNS OF PURCHARSING NEW VEHICLES
Distribution of count number of Trade-in vehicles by age 0.00% 2.00% 4.00% 6.00% 8.00% 10.00% 12.00% 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 % of the total 0.00% 1.00% 2.00% 3.00% 4.00% 5.00% 6.00% 7.00% 8.00% 9.00% 0K 10K 20K 30K 40K 50K 60K 70K 80K 90K 100K 110K 120K 130K 140K 150K 160K 170K 180K 190K 200K 210K 220K 230K 240K 250K 260K 270K 280K 290K 300K 310K 320K 330K 340K 350K 360K 370K 380K 390K 400K Count of Trade In Odometer Reading Odometer: Avg: 130,000 miles Median: 140,000 miles Cutoff >400K Year: Avg: 12 Median: 14 Distribution of count number of Trade-in vehicles by mileage Most people choose to buy a new vehicle when their cars are around 12 years old and 130K miles. Average years of trade-in vehicle: 12 years Average mileage of trade -in vehicle: 130,000 miles Year and Mileage
EVALUATE THE CONCLUSION WILDLY 皆雨遺遺掘皆皆酷雨晦
EVALUATE Government Perspective Number of trade-in vehicles Program duration Survey Sample size (21% response) Insignificant level Question Design Incremental sales even without program 12% will still purchase vehicles Held off purchase in June 2009 Disposed trade-in vehicles Good condition vehicles will be destroyed Wheel or tires cant be reused 2 of the top 3 new vehicles are Japanese brands Macroeconomic GDP Unemployment Rate Purchase Motivation National Brand Protection Wasteful Resources Not a Robust Survey Sustainable development
DATA SOURCE: C.A.R.S Program data: http://www.nhtsa.gov/Laws+&+Regulations/CARS+Program+Transaction+Data+and+Rep orts VEHICLE REGISTRATIONS DATA: http://www.census.gov/compendia/statab/cats/transportation/motor_vehicle_registrations_ alternative_fueled_vehicles.html Automobiles, trucks, and buses (excludes motorcycles). Excludes vehicles owned by military services. DATA CLEAN: 51 States (50 states + 1 Washington. DC) Drop off four States: Guam Northern, Mariana Islands, Puerto Rico, Virgin Islands (reason: no registrations information in census data) DATA ANOMALIES Trade in Odometer reading: 9,999,999, etc. APPENDIX
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Cash For Clunker (US CARS PROGRAM)

  • 1. CASE STUDY CASH - FOR - CLUNKERS WENYIYAN WYYWENYI@GMAIL.COM (408)-858-6259
  • 2. INTRODUCTION Program: 2009 U.S. Cash - for - Clunkers Encourage to retire old and lower MPG vehicle and purchase higher MPG vehicle Duration: July and August 2009 Objective: Stimulate U.S. Economy Put more fuel-efficient cars on the road Incentive: $3,500 or $4,500 credit
  • 3. KEY DATA Duration: 30 days Number of Trade-In Vehicles: 677,984 Government spent (incentives): $2.8 Billion Total sales (MSRP) of New Vehicles: $15 Billion (14.42 trillion GDP in 2009) (0.1%GDP) National Coverage: 55 Areas (50 States + 1 District + 4 Insular areas)
  • 4. QUESTION Identify the 10 most successful states and the 10 least successful states. Study the trade-in behavior of west coast consumers against consumers from other areas. Study the behavioral patterns of consumers purchasing new vehicles. Evaluate the conclusion wildly successful from government.
  • 5. METHODOLOGY Step 1: calculate the average MPG of trade-in vehicles in each state (MPG-old) Step 2: calculate the average MPG of new vehicles in each state (MPG-new ) Step 3: calculate the MPG % increase. (MPG-new MPG-old) / MPG-old Step 4: sum the total trade-in vehicles in each state Step 5: get the total number of registered vehicles in each state (census.gov) Step 6: calculate the trade-in coverage ratio in each state number of trade-in vehicles/ registered vehicles eg: California MPG % increase = 66% Trade-in coverage ratio = 0.22% Data Point of California CA(66%, 0.22%)
  • 6. METHODOLOGY Y-Axis: Trade-in Coverage Ratio origin : ( Avg x, Avg y) Successful Area Least Successful Area X-Axis: MPG % Increase 55 areas of data points Plot 55 areas of data points in the quadrant X-Axis: MPG % increase Y-Axis: Trade-in Coverage Ratio Origin: Average of MPG % increase in 55 areas Average of Trade-in Coverage Ratio in 55 areas First quartile -> best performance Third quartile -> worst performance Origin (59%, 0.27%) California(66%,0.22%) California (66%, 0.22%)
  • 7. Y- Axis: Trade-in Coverage Ratio: Max: 0.60% Min: 0.01% Avg: 0.27% Median: 0.26% X- Axis: MPG % Increase: Max: 66.08% Min: 51.15% Avg: 58.57% Median: 57.73% Threshold Line: Slope of Line: K = Y / X (Max Trade-in - Min Trade-in Ratio) (Max MPG % - Min MPG %)
  • 8. Successful States: Oregon Colorado Virginia Minnesota Connecticut Maryland Rhode Island Vermont Maine New Hampshire Least Successful States: Georgia South Carolina Hawaii South Dakota Arkansas Alabama Alaska Mississippi *District of Columbia Wyoming
  • 9. State Performance by MPG & Trade in Coverage (Geographic Visualization)
  • 10. State Performance by Sales Successful States: California, Texas, New York, Florida, Illinois, Pennsylvania, Ohio, Michigan, New Jersey, Virginia Least Successful States: *District of Columbia, Wyoming, Alaska, Montana, Hawaii, North Dakota, Vermont, South Dakota, Rhode Island, Delaware
  • 11. THE PERFORMANCE OF WEST COAST CONSUMERS
  • 12. MPG % increase in West Coast and other areas *West Coast refers to the states of California, Oregon and Washington. 64.7% 58.2% 54.0% 56.0% 58.0% 60.0% 62.0% 64.0% 66.0% West Coast Other Areas % MPG increase 0.076% 0.006% 0.000% 0.010% 0.020% 0.030% 0.040% 0.050% 0.060% 0.070% 0.080% 0.090% West Coast Other Areas % Trade in coverage Trade-in Coverage in West Coast and other areas West Coast consumers purchased more fuel efficient vehicles than other areas. MPG % increase in west coast is higher than other areas by 14%. Trade-in ratio coverage in west coast is 11 times grater than other areas. MPG / Trade-in Ratio
  • 13. More percentage consumers in other areas switched from trucks to passenger cars. 81% 63% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% % truck in Trade-in Vehicle in West Coast % truck in New Vehicle in West Coast Trucks 86% 42% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% % truck in Trade-in Vehicle in Other Areas % truck in New Vehicle Other Areas Trucks In west coast, there are 81% trade-in vehicles which are trucks. In new purchased vehicles, there are 63% are trucks. 18% consumers switched from trucks to passenger cars. In other area, there are 86% trade-in vehicles which are trucks. In new purchased vehicles, there are 42% are trucks. 44% of the consumers switched from trucks to passenger cars. Type of Vehicles
  • 14. 4% 61% 9% 26% West Coast EU Japan Korean US 3% 43% 12% 42% Other Areas EU Japan Korean US West coast consumers like to buy Japanese brand vehicles than other areas. 61% consumers purchased Japanese brand in west coast. Consumers in other areas bought more US brand vehicles than west coast. 42% consumers purchased US brand in other areas. Brand of Vehicles
  • 16. Distribution of count number of Trade-in vehicles by age 0.00% 2.00% 4.00% 6.00% 8.00% 10.00% 12.00% 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 % of the total 0.00% 1.00% 2.00% 3.00% 4.00% 5.00% 6.00% 7.00% 8.00% 9.00% 0K 10K 20K 30K 40K 50K 60K 70K 80K 90K 100K 110K 120K 130K 140K 150K 160K 170K 180K 190K 200K 210K 220K 230K 240K 250K 260K 270K 280K 290K 300K 310K 320K 330K 340K 350K 360K 370K 380K 390K 400K Count of Trade In Odometer Reading Odometer: Avg: 130,000 miles Median: 140,000 miles Cutoff >400K Year: Avg: 12 Median: 14 Distribution of count number of Trade-in vehicles by mileage Most people choose to buy a new vehicle when their cars are around 12 years old and 130K miles. Average years of trade-in vehicle: 12 years Average mileage of trade -in vehicle: 130,000 miles Year and Mileage
  • 17. EVALUATE THE CONCLUSION WILDLY 皆雨遺遺掘皆皆酷雨晦
  • 18. EVALUATE Government Perspective Number of trade-in vehicles Program duration Survey Sample size (21% response) Insignificant level Question Design Incremental sales even without program 12% will still purchase vehicles Held off purchase in June 2009 Disposed trade-in vehicles Good condition vehicles will be destroyed Wheel or tires cant be reused 2 of the top 3 new vehicles are Japanese brands Macroeconomic GDP Unemployment Rate Purchase Motivation National Brand Protection Wasteful Resources Not a Robust Survey Sustainable development
  • 19. DATA SOURCE: C.A.R.S Program data: http://www.nhtsa.gov/Laws+&+Regulations/CARS+Program+Transaction+Data+and+Rep orts VEHICLE REGISTRATIONS DATA: http://www.census.gov/compendia/statab/cats/transportation/motor_vehicle_registrations_ alternative_fueled_vehicles.html Automobiles, trucks, and buses (excludes motorcycles). Excludes vehicles owned by military services. DATA CLEAN: 51 States (50 states + 1 Washington. DC) Drop off four States: Guam Northern, Mariana Islands, Puerto Rico, Virgin Islands (reason: no registrations information in census data) DATA ANOMALIES Trade in Odometer reading: 9,999,999, etc. APPENDIX

Editor's Notes

  • #3: Cash for clunkers was a $3 billion program that attempted to stimulate U.S. economy and improve the environment by encouraging more consumers to retire old vehicles and purchase new fuel efficient vehicles by giving monetary incentive of $3,500 or 4,500 credit
  • #4: % GDP
  • #8: X Axis Y Axis Coordinate is average of the MPG and Trade in coverage
  • #10: The Darker the red The bigger the circle Using this performance metric: States with better performance are along the coasts. States with bad performance mid east
  • #11: Stimulate the economic, performance metrics would be contribute by the Sales Money $$$$
  • #13: In west Coast MPG % increase is 64.7%,
  • #14: In west Coast MPG % increase is 64.7%,
  • #19: Sustainable development