With automakers releasing their July sales figures, it is clear that the federal government’s Car Allowance Rebate System (CARS) program was a huge hit with consumers, despite its rushed and at times frustrating deployment. Better known as “Cash for Clunkers,” the allocated $1 billion in funding was mostly used up within the first week by consumers trading in older vehicles for more fuel-efficient models. The incentive program gave the auto industry a shot of adrenaline, cleared dealer lots of many 2009 models, and filled driveways with new cars.

The average clunkers trade-in resulted in a fuel economy increase of 9.6 mpg, or about 61 percent, much higher than expected. The average mpg of clunkers traded in was 15.8 mpg, while the average new model purchased got 25.4 mpg, according to the Detroit News. At that rate, the average customer will save more than $700 a year in fuel costs (assuming $2.50 a gallon and 12,000 annual miles).

Nearly half the cars purchased under the CARS program were made by Detroit’s Big Three. At 47 percent, that’s a greater percentage than their current combined share of the market.

For most automakers, July sales were weaker than a year ago but stronger than expected even without the CARS program. But three companies, Ford, Hyundai, and Subaru saw higher sales in July 2009 than in July 2008. The Detroit News identified the Ford Focus as the biggest seller under the Clunkers program, with 21,830 of them sold in July.

Cash for clunkers was a runaway success, accomplishing months worth of stimulus in just days. Eager for more positive economic news, Congress is now looking at how to continue the momentum. The House has approved a measure to extend CARS with another $2 billion in funding. President Obama has called on the Senate to extend the program by Friday. However, some opposition to the current bill and fast-approaching summer recesses could cause the program to stall.

As a side benefit, those new cars replacing old ones also bring the latest in safety advances such as side curtain airbags and stability control in many new models.

For now, CARS.gov advises that the program is still in effect, although some dealers have stopped making new deals until the program receives more money, and some have run out of cars that qualify.
Read: CARS program sputters, what should car shoppers do?

For more information on the cash for clunkers program, see our guide. Also, check out our forum to share your buying experience.

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