Cash for Clunkers
Posted: Thu Oct 29, 2009 4:25 pm
Cash for Clunkers cost $24,000 per car
Edmunds.com says only 125,000 vehicle sales were a result of the government's program.
Posted by Elizabeth Strott on Thursday, October 29, 2009 10:54 AM
The U.S. government is calling its Cash for Clunkers program a big success, with nearly 690,000 vehicles sold in July and August. But a report by automotive Web site Edmunds.com says the program actually cost taxpayers $24,000 per car sold.
Only 125,000, or 18%, of the sales were incremental, according to Edmunds.com -- the remaining 82% of sales would have happened regardless of the program.
The $24,000 is the price for the sales of vehicles that were a direct result of the program, Edmunds.com said.
Bing: Auto sales
The clunkers program gave car buyers rebates of up to $4,500 if they traded in less-fuel-efficient vehicles for new vehicles that met certain fuel-economy requirements. The government set aside $3 billion for those rebates.
Edmunds.com looked at the sales trend for luxury vehicles and other models not included in program, and it applied the historic sales volumes of those vehicles and those in the program and estimated what the sales figures would have been without the program. The analysts then divided the $3 billion by their 125,000-vehicle number to get an average of $24,000 per vehicle.
The average transaction price for a new vehicle in August was only $26,915, minus an average cash rebate of $1,667.
"This analysis is valuable for two reasons," Edmunds.com CEO Jeremy Anwyl said in a press release. "First, it can form the basis for a complete assessment of the program's impact and costs. Second -- and more important -- it can help us to understand the true state of auto sales and the economy. For example, October sales are up, but without Cash for Clunkers , sales would have been even better. This suggests that the industry's recovery is gaining momentum."
The government was not pleased with Edmunds.com's analysis.
"It is unfortunate that Edmunds.com has had nothing but negative things to say about a wildly successful program that sold nearly 250,000 cars in its first four days alone," Bill Adams, spokesman for the Department of Transportation , told CNNMoney.com. "There can be no doubt that (the clunkers program) drummed up more business for car dealers at a time when they needed help the most."
The economy grew at a 3.5% pace in the third quarter, thanks to a jump in auto sales as a result of the clunkers program. Auto sales contributed 1.7 percentage points to the GDP, the government said in a report this morning.
Edmunds.com says only 125,000 vehicle sales were a result of the government's program.
Posted by Elizabeth Strott on Thursday, October 29, 2009 10:54 AM
The U.S. government is calling its Cash for Clunkers program a big success, with nearly 690,000 vehicles sold in July and August. But a report by automotive Web site Edmunds.com says the program actually cost taxpayers $24,000 per car sold.
Only 125,000, or 18%, of the sales were incremental, according to Edmunds.com -- the remaining 82% of sales would have happened regardless of the program.
The $24,000 is the price for the sales of vehicles that were a direct result of the program, Edmunds.com said.
Bing: Auto sales
The clunkers program gave car buyers rebates of up to $4,500 if they traded in less-fuel-efficient vehicles for new vehicles that met certain fuel-economy requirements. The government set aside $3 billion for those rebates.
Edmunds.com looked at the sales trend for luxury vehicles and other models not included in program, and it applied the historic sales volumes of those vehicles and those in the program and estimated what the sales figures would have been without the program. The analysts then divided the $3 billion by their 125,000-vehicle number to get an average of $24,000 per vehicle.
The average transaction price for a new vehicle in August was only $26,915, minus an average cash rebate of $1,667.
"This analysis is valuable for two reasons," Edmunds.com CEO Jeremy Anwyl said in a press release. "First, it can form the basis for a complete assessment of the program's impact and costs. Second -- and more important -- it can help us to understand the true state of auto sales and the economy. For example, October sales are up, but without Cash for Clunkers , sales would have been even better. This suggests that the industry's recovery is gaining momentum."
The government was not pleased with Edmunds.com's analysis.
"It is unfortunate that Edmunds.com has had nothing but negative things to say about a wildly successful program that sold nearly 250,000 cars in its first four days alone," Bill Adams, spokesman for the Department of Transportation , told CNNMoney.com. "There can be no doubt that (the clunkers program) drummed up more business for car dealers at a time when they needed help the most."
The economy grew at a 3.5% pace in the third quarter, thanks to a jump in auto sales as a result of the clunkers program. Auto sales contributed 1.7 percentage points to the GDP, the government said in a report this morning.
but it wouldn't qualify. I was talking to a dealer who said a lot of the cars he got was the way I was trying to do it. Get a clunker in the family to trade in. The low income people that had the real clunker as their only vehicle, had to keep it because they couldn't afford the payments on a new car even with the $4,500.00 trade in. Like it was said, the middle class probably got the advantage this time. I still think it was a bust, with the amount of fuel that was supposed to be saved, the actual cost per unit to the Feds and total dollar amount that it will cost the tax payer eventually. I believe the return on investment by the Feds was probably a negative in dollars and sense. 