That’s what some critics of the federal government’s Cash for Clunkers program predicted would be the outcome – that the short term boost in volume would cannabalize future sales.

Not so, according to a study released this week by Maritz Automotive Research Group. In fact, the study indicated, not only did the program create significantly more incremental sales than previously estimated, but it did so without negatively impacting future sales.

The group surveyed nearly 36,000 consumers who purchased a car while the Car Allowance Rebate System (CARS) was active in July and August 2009.

Previous reports on the Cash for Clunkers program estimated incremental sales somewhere between 125,000 and 346,000 vehicles. The new Maritz report, however, estimates that dealers made 542,000 incremental new vehicle sales as a result of the initiative.

“Our findings not only provide strong evidence that many more vehicles were sold as a direct result of the incentive program than were previously estimated,” said Dave Fish, PhD, vice president of the Maritz Automotive Research Group, “but they also largely debunk the myth that Cash for Clunkers mortgaged future car and truck sales.”

“In fact,” Fish said, “the program resulted in sales of vehicles to people who don’t normally buy them.”

Government records published on www.CARS.gov indicated 677,000 vehicles qualified as CARS transactions.

The Maritz report analyzed consumers who acquired a new vehicle (CARS and non-CARS participants) and found that only 4% of program participants would have still purchased or leased a new vehicle without the incentive, and 13% intended to take advantage of the incentive but did not qualify. Thirty-one percent took advantage of the incentive rebate specifically because of the CARS program, and 52% did not participate in CARS and never intended to.

Maritz also estimated that an additional 233,000 vehicles sold in July and August 2009 were purchased by consumers who wanted to participate in CARS, but did not qualify, yet they purchased or leased a new vehicle anyway.

“The ‘halo sales’ of 223,000 vehicles were an added bonus to the already solid results produced by the CARS program,” Fish said.

And while sales did dip slightly in September 2009, likely due to a dealer shortage of inventory, statistics from the US Department of Commerce’s Bureau of Economic Analysis showed a Seasonally Adjusted Annual Rate of sales from October through December 2009 were at a higher pace than before the CARS program was implemented.

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What has been your experience with Cash for Clunkers? How did your sales do? Share your experiences and observations in the comments.

As Toyota faces waves of recalls, individual dealers run the risk of their local brands taking a battering along with that of the
manufacturer. And while Toyota runs spin nationally on the recalls and questions about product safety, dealers have to manage crisis communications of their own to ensure their local reputations aren’t damaged.

Michael Sommermeyer, the Nevada-based strategist and PR consultant behind wordymouth.com, says the standards of crisis communication come into play at the local level, as well as nationally.

Sommermeyer likens the process to battle planning and points out the four keys in dealing with crisis communications: 1) Understand the field, 2) Develop a plan, 3) Think logistics, and 4) Have reserves.

That’s just what some Toyota dealers have done to do their part to assuage owner concerns.

People visiting the Pennsylvania-based Ardmore Toyota’s website are greeted with a prominent message atop their normal dealership homepage. The dealership announced extended hours, increased staff, an Open House, and live repair demos, all in effort to comfort concerned customers.

Ardmore owners told the Philadelphia Inquirer that the efforts were helping. “They’re a lot more at ease after they’ve spoken with us,” Paul told the paper. “There are a very few that seem to be overalarmed, and we handle those individually.”

Grossinger Toyota in Lincolnwood, IL, posted a 24/7 toll-free number, recall information, a service appointment scheduler, and a video on what to do if the accelerator sticks. Grossinger started 24/7 hours on Feb. 4 to handle the volume of customers affected by the recall.

Other dealers were taking things a step further. The New York Post featured a Long Island dealership that offered manicures for customers while they waited for the recall repairs. “We’re giving out free movie passes, and we drive them to the movies while their car is being worked on. We’re also giving free manicures,” one senior employee at Atlantic Toyota told the Post. “We are trying to calm them down a little.”

And Dealers aren’t totally on their own to deal with the 4.6 million-vehicle recall — Toyota provided as much as $75K to some dealers to manage the influx of calls and additional staff hours.

Only time will tell whether the extra effort can keep the dealers from feeling the brunt of the reputation damage caused by the recall.
Do you have a creative way that you have — or are handling — crisis communications at your company? We’d love to hear about them. Please share your ideas in the comments.

Do you think your company could successfully launch a product exclusively with an iPhone application? No television, no print, no radio. Volkswagen of American has given it a try. In October of 2009, Volkswagen launched an iPhone game application free to iPhone and iPod touch users.  The application features the new 2010 GTI model in a simulated racing game, allowing users to tweet to other players in real time. The application also allows the users to browse through a digital showroom, exploring all aspects of the 2010 GTI automobile.

You may be wondering what the draw is to a marketing plan like this.  For the consumers, it’s a win-win situation.  The application is free, fun and enters each phone owner into a contest to win a limited edition GTI from Volkswagen each time he / she plays. But the real winner here may be Volkswagen.  In a recent article outlining the launch, Advertising Age reported that in 2006 Volkswagen spent $60 million on a “traditional” advertising campaign for the GTI’s introduction.  Estimated annual costs for the new mobile services are only reaching about $500,000.  Even more staggering are the differences in potential buyer outreach that both means have.  Advertising Age said, “Apple reports that they have more than 50 million iPhone and iTouch users worldwide”. This is nearly double what an average network spot sees in viewership, even a 30-second commercial spot can cost up to $150,000.

While the low cost probably has the Volkswagen folks smiling, they should also be happy about the immeasurable benefits of the PR buzz this campaign has created. Being the first to think creatively always gets noticed whether it is good (as this one appears to be) or bad. Take, for instance, the recent energy drink mobile application which completely demeaned women down to mere categories in a man’s iPhone. While most would completely agree this was flop (and tasteless) the negative press that was generated still got the company name at the forefront of consumers’ minds. As the saying goes, “There is no such thing as bad press.” Perhaps not the best marketing strategy to go by, but sometimes it is worth the risk to be different. Creativity (in good taste) is certainly encouraged.

This cost effective one-channel advertising could become a revolutionizing marketing tool, when executed properly. Volkswagen believes this new campaign will be effective because they are directly targeting the consumers they are hoping to reach — tech-savvy and youthful.

An area that may often go overlooked with this idea is the possibility of a re-launch in the event that the results don’t quite match up with the expectations or supplemental advertising later in the campaign life cycle. While having to “relaunch” a second marketing campaign because the first was not successful is never an ideal situation, Volkswagen does have one advantage if the iPhone marketing is a bust – money. The budget is so much smaller than previous campaigns that Volkswagen might find it less painful to allocate funds for a second (or extended) go.

What do you think?  Leave us your comments on whether or not you think one-channel mobile marketing campaigns will be a successful technique in the near future.

In the original bill that passed the House earlier this summer, $4 billion was allocated to the program, but the Senate reduced that to $1 billion in the version passed to the President. With the $2 billion funds refreshment earlier this month, they were still $1 billion behind the original allocation.

NADA and The U.S. Department of Transportation are reporting some preliminary statistics from the program. By the deadline at 8p.m. on Tuesday, dealers had submitted a total of 690,114 claims on deals totaling $2.88 billion, just shy of the $3 billion budget. Those numbers are subject to dealer reapplications for rejected claims that can be turned in after the deadline date.

The top five automakers to sell the most vehicles were Toyota, Honda, Ford, Hyundai and Nissan with an average trade-in mileage of 15.8 mpg.

Ray LaHood, the U.S. Transportation Secretary said, “American consumers and workers were the clear winners thanks to Cash for Clunkers program. Manufacturing plants have added shifts and recalled workers. Moribund (or declining) showrooms were brought back to life and consumers bought fuel-efficient cars that will save them money and improve the environment.”