CASE STUDY

CASH - FOR - CLUNKERS

WENYI YAN

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 = Δ Y / Δ 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-inVehicle in West Coast

% truck in NewVehicle in West Coast

Trucks

86%

42%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

% truck in Trade-inVehicle in Other

Areas

% truck in NewVehicle 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

10

K

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K

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K

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K

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K

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K

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90

K

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0K

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 SUCCESSFUL”

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 can’t 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

THANK YOU