Who’s Cashing in on All Those Clunkers?

In a recent Compete blog, we discussed the cash for clunkers government program CARS (Cars Allowance Rebate System) and the amount of online attention it drew from new vehicle prospects, both in terms of unique visitors to the cars.gov site and to OEM sites. That attention, combined with attractive incentives to junk an old gas guzzler and replace it with a newer, more fuel efficient model contributed to a July sales surge of more than 15% month-over-month. While sales remained down compared to a year ago, the program proved to be a much needed shot in the arm for an industry struggling to get back on its feet.

But how much of that increase in OEM site traffic can we tie to back to the cash for clunkers program? Taking a deeper look at Compete’s online panel of consumers, we were able to track the number of consumers who searched for information on cash for clunkers (or some variation of clunkers) during the month of July. Not surprisingly, the number of searchers sky-rocketed during the last two weeks of the month with 1.2 million searching for information during the last week alone.

As the number of clunker searchers was going through the roof, a significant proportion of those people also visited an auto OEM site. In fact, more than one-third of overall searchers also visited an OEM site during the last two weeks of July, reaching 400,000 the final week. But the lift among OEM visitors was not as great as the overall lift among clunker searchers in general. That suggests there was a lot of curiosity in the program that did not translate into engagement with an auto manufacturer, meaning the sales contribution may have been less than it could have been.

So who benefited from all that clunker traffic? Certainly, you’d expect those automakers known for their fuel efficiency such as Toyota and Honda to get the attention of clunker searchers and in fact that was the case as those two brands led the way. A whopping 42% of clunker searchers also visited toyota.com, nearly three times the rate of Honda. But that’s not too surprising since when someone googled "cash for clunkers" the number one sponsored link was toyota.com/cashforclunkers. And as a measure of Toyota’s success, they had 3 of the top 5 models purchased as part of the program — #1 Corolla, #4 Prius and #5 Camry.

Taking it a step further and comparing clunker search share to a brand’s Share of Market Interest (a Compete measure of a brand’s share of market-wide shoppers) Toyota and Dodge interest associated with the program outperformed on their ability to attract clunker searchers. Honda and Nissan performed on par while Ford underperformed versus its shopping share

Dodge’s performance is of special interest since it doesn’t necessarily have a reputation for fuel efficiency and it doesn’t offer any hybrid models. However, Chrysler offered incentives that matched the cash for clunkers incentives which allowed them to effectively piggyback on the program. This likely helped drive consumer interest in Dodge as well as the other Chrysler brands as both Chrysler and Jeep searches also exceeded their SMI.

Ford is a different story. Its SMI has been driven to a record high 22% on the growth of the 2010 Fusion and recently launched Taurus. Yet just 15% of clunker searches also visited fordvehicles.com. It appears that while clunker searchers where interested in fuel economy, Ford shoppers have been more interested in the company’s new models.

While cash for clunkers is no doubt having a short term impact on auto sales, the real question going forward will be around its long-term effects, especially now that the program has been extended. These programs — like the assurance programs launched earlier in the year – tend to have their greatest impact in the first month of two and then taper off. And while July sales were up month-over-month they still trailed compared to a year ago. The industry’s struggles are far from over but cash for clunkers provides a needed boost. As buyers are pulled forward and inventories continue to fall, keeping the sales momentum going through the end of year will be a challenge. To best capitalize on cash for clunkers and similar tactics, automakers need to monitor overall brand and model demand as well as keep pace with search dynamics and how it drives that demand.

About Dennis Bulgarelli:
Dennis Bulgarelli is a Client Services Director at Compete. At Compete Dennis is responsible for advising auto clients on trends in consumer online shopping behavior. Before Dennis joined the Compete team he did research and planning at most of the large ad agencies. Dennis hopes to one day, drive cross- country on the blue highways. Follow Dennis on Twitter @dennisbul or connect with him on LinkedIn at http://www.linkedin.com/in/dennisbulgarelli.

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