Cash for Clunkers’ Hidden Consequences

The federal government’s Cash for Clunkers program, where owners of older vehicles can turn in their wheels for a more fuel efficient model and receive a tax credit of up to $4,500, has been a big hit. In fact, the first $1 billion was used up in less than a week, prompting the federal government to approve another $2 billion to the program. But the stimulus may have adverse effects, such as pulling new car sales forward while reducing demand at auto repair shops. Scott Eisenberg, managing director of Amherst Partners, a restructuring firm in Birmingham, addresses the winners and losers of the program.

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