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Cash for Clunkers cost $24,000 per car
Edmunds.com says only 125,000 vehicle sales were a result of the government's program.
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.
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.
miklock: That 1991 Ford Crown Victoria I used for my cash for clunkers voucher was 18 years old and I bought that brand new. I logged over 250,000 miles on the old girl and it ran just as good as when I drove it off the dealer lot in the summer of 1991. I am a mechanic by trade and most people know that a car will last as long as scheduled maintenance is performed and the vehicle is cared for. I have a nephew that has a 2006 Cobalt and it's a p.o.s. because he chose to not take care of it. Did I get good deal? I think so considering the sticker was was almost 27,000 and after registering the new Ford I paid 19,744. That final price does not reflect the other incentives I was able to get out of the dealership such as 2 years of oil changes and scheduled maintenance checks up to and including the 75,000 mile scheduled maintenance. Including myself I know of 5 people that took advantage of the gracious cash for clunkers program and every one of us was very happy to be able to have gotten in on the deal.
Hub67: First of all there is nothing written in stone dictating what might have been sold with or without the cash for clunkers program. In order to put any kind of validity to the claims that most people were going to buy a car anyway one would have to survey every single person that participated in the program to find out who was and was not going to buy a car . I stated this earlier, I think the people that are crying about this so called waste of taxpayers money were not in a financial position to take advantage of this great program. Most financially responsible people jumped at the chance to upgrade to something better. We will never know what might have been during those few short weeks the program was active. Unless and until there is an independent survey of the buyers and sellers, I, as well as others should be unwilling to accept some fictitious **** spoon fed to those stupid enough to believe someone's uneducated and unresearched figures. Lets face it, the program worked for the haves and didn't for the have not's.
For you liberal idiot blind Obama lovers that don't understand ... look at this example.
If I sell 100 glasses of Kool-aid on average for each month ... then the government add a stimulus to stimulate my sales and I sell 130 glasses that month ... THEY CAN'T ASSUME RESPONSIBILITY FOR ALL 130 GLASSES SOLD THAT MONTH!!!
100 would have been sold anyway. You divide the money they spent of the program divided by the increase (30) ... not the whole (130).
Duh?
Obama is a clunker. Can't wait to trade him in, if we're still even around. Three years to go and counting.I just bought a 1996 Nissan Pathfinder for $350.00 It runs ... barely ... but just enough. I'm putting storage insurance on it. Why you may ask?
Because once the government starts programs like this ... they have to continue them. I'm putting my money on the guess that one year from now the economy won't be any better and the unemployment rate will be just as high or higher. The auto industry will still be on the edge of bankruptcy and the government will HAVE to do something to keep their ugly step child (GM) in business.
Then ... when the government does the cash-for-clunkers program again I can get my new car. I don't really need one ... my 2006 Honda only has 37,000 miles on it. But for $4500 off ... how can I go wrong. Since I'm trading the Nissan (16mpg) as the primary car (the honda gets 30mpg) I will still be eligible for the program. Worse case ... I'll just sell the Honda outright.
If you doubt this will happen? Remember after 911 when the auto makes gave out 0% interest ... sales went up. When they stopped ... sales went down. They said it was a way to stimulate immediate sales ... because if they didn't ... the would have to lay-off workers and everyone would suffer ... including suppliers ... blah blah blah.
Guess what ... it's almost 2010 and guess what the auto makers are STILL doing ... 0% interest.
Who wants to put some money on this bet?
I just love this term "properly distributed". Wealth (regardless of if it comes from wages, savings, business income, the lottery, whatever) gets distributed based on the market and how we all participate in it.
It's a free market, folks - you take your risks and they either pay off or they don't. Yes, there have been some cases where people have made outrageous sums of money by risking their invetors' money and not their own, but that is not the lioon's share here. For the most part, the "wealthy" got that way because they took a risk and often invested their own money to build their business, work on an invention, get a higher education, etc.
Now that they have had their risk pay off, other people seem to believe this is an ill-gotten gain. And they want to take that money at the end of a gun (the federal government's taxing authority) with the justification that the wealth gained is somehow "improperly-distrubited".
The guy living down the street has a $2 million house, 4 cars (one of them an Italian sports car) snd a vacation home on the beach. I have none of those. But HE spent 12 years in medical school, residency, getting his anesthesiology specialization, etc. Then he took out a half-million dollar loan to start his own practice. NOW, we want to say he shouldn't have such a rich lifestyle. Let's take his money and tax it to death, because HE somehow made this money "improperly".
The day is going to come when those that run/own the machinery of commerce decide it is no longer worth it to be seen as somehow taking advantage of others. They are going to step back and decide that their long hours, the investments they have to make, the risks they have to take ARE NO LONGER WORTH the return they make after taxes. They are going to head to that beach house, make themselves a nice umbrella drink, and tell society no thanks.
Go Galt
Also, I see nothing in the article as Obama-bashing.
WHAT PERCENTAGE OF THE AUTOMOBILES SOLD WERE AMERICAN MADE? THIS PROGRAM SHOULD HAVE BEEN CALLED "CASH FOR JAPAN" OR "CASH FOR THE NON-PATRIOTIC". WHY SUPPORT ANOTHER COUNTRY WHEN THE COUNTRY YOU LIVE IN IS GOING TO SHAMBLES
Foreign auto makers produce cars in numerous plants in the US. You cannot point to a single US auto manufacturer's product that is made/assembled from 100% US made parts.
Hog Rider wrote:
StockScouter data provided by Gradient Analytics, Inc.
Quotes supplied by Interactive Data.
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