Cash for Clunkers Results Finally In: Taxpayers Paid $24,000 per Vehicle Sold.

[uncltrvlnmatt]

http://www.edmunds.com/help/about/press/159446/article.html


Cash for Clunkers Results Finally In: Taxpayers Paid $24,000 per Vehicle Sold, Reports Edmunds.com

SANTA MONICA, Calif. ? October 28, 2009 ? Edmunds.com, the premier resource for online automotive information, has determined that Cash for Clunkers cost taxpayers $24,000 per vehicle sold.

Nearly 690,000 vehicles were sold during the Cash for Clunkers program, officially known as CARS, but Edmunds.com analysts calculated that only 125,000 of the sales were incremental. The rest of the sales would have happened anyway, regardless of the existence of the program.

Ironically, the average transaction price for a new vehicle in August 2009 was only $26,915 minus an average cash rebate of $1,667.

"This analysis is valuable for two reasons," explained Edmunds.com CEO Jeremy Anwyl. "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 chart below sets forth actual SAAR (Seasonally Adjusted Annual Rate) compared to Edmunds.com's forecasted rate if the program had never been implemented.

  Actual (or Forecast) If no Cash for Clunkers Difference Sales Volume
Jan '09 9.59 9.59 n/a 654,922
Feb '09 9.14 9.14 n/a 687,182
Mar '09 9.69 9.69 n/a 855,146
April '09 9.20 9.20 n/a 817,096
May '09 9.85 9.85 n/a 923,141
Jun '09 9.67 9.80 -0.13 857,447
Jul '09 11.22 10.11 1.11 995,216
Aug '09 14.06 10.45 3.61 1,258,747
Sep '09 9.19 10.63 -1.44 744,367
Oct '09 10.40 10.89 -0.49 n/a
Nov '09 10.40 10.82 -0.42 n/a
Dec '09 10.61 10.85 -0.24 n/a

"Our research indicates that without the Cash for Clunkers program, many customers would not have traded in an old vehicle when making a new purchase," Edmunds.com Senior Analyst David Tompkins, PhD told AutoObserver.com. "That may give some credence to the environmental claims, but unfortunately the economic claims have been rendered quite weak."

To conduct the analysis, the Edmunds.com team of PhDs and statisticians examined the sales trend for luxury vehicles and others not included in Cash for Clunkers, and applied the historic relationship of those vehicles to total SAAR to make informed estimates. These estimates were independently verified through careful examination of sales patterns reflected by transaction data. Once the numbers were determined, Edmunds.com's analysts divided three billion dollars by 125,000 vehicles to arrive at the average $24,000 per vehicle.

Coincidentally, a parallel analysis of the first-time homebuyer credit was reported yesterday by MIT Sloan Professor Simon Johnson and Yale law student James Kwak, who both blog about economics at The BaseLine Scenario.

About Edmunds Inc. (http://www.edmunds.com/help/about/)
Edmunds Inc. publishes four Web sites that empower, engage and educate automotive consumers, enthusiasts and insiders. Edmunds.com, the premier online resource for automotive consumer information, launched in 1995 as the first automotive information Web site. Its most popular feature, the Edmunds.com True Market Value?, is relied upon by millions of people seeking current transaction prices for new and used vehicles. Edmunds.com was named "Best Car Research Site" by Forbes ASAP, has been selected by consumers as the "Most Useful Web Site" according to every J.D. Power and Associates New Autoshopper.com Study(SM), was ranked first in the Survey of Car-Shopping Web Sites by The Wall Street Journal and was rated "#1" in Keynote's study of third-party automotive Web sites. Inside Line launched in 2005 and is the most-read automotive enthusiast Web site. CarSpace launched in 2006 and is an automotive social networking Web site and home to the oldest and most established automotive community. AutoObserver.com launched in 2007 and provides insightful automotive industry commentary and analysis. Edmunds Inc. is headquartered in Santa Monica, California, and maintains a satellite office in suburban Detroit.

[venmuss]

C4C seemed more like a placebo to me.  Even if it only sold 125,000 extra cars, the GDP for 3rd quarter is still, what, +3.5%?  That's a start.  I would think some of the consumption came from people who saw the government trying all those things and gaining a little more confidence in it, and getting back to their old spending habits. 

[uncltrvlnmatt]

I don't think you are understanding the point of the article. The cost per car to the tax payer was $24,000! Not $4,500.

[MustangChris]

how the fug did that happen?

[uncltrvlnmatt]

how the fug did that happen?

The government got involved.

[DropTopPony]

I'd like to thank the taxpayers for my new Escape.... we are really enjoying it

When this program started i knew there would be extra costs involved since the dealers had to get paid hefty fees to do all that extra paperwork and deal with the gov't plus an entire staff of gov't employees had to get paid to handle the incoming paperwork and send the money to the dealers so that right there could add up to $5000 extra per car.

Edmunds is in the ballpark i think but a lot of there basis is that the auto industry was going to sell X amount of cars in Aug/Sept anyway but to be honest the car sales industry was tanking and dealers would have easily been down 20% from last years numbers so Edmunds figures are a little high in my professional sales experience but i still commend them for calling out the gov't on this.

[got5.0]

how the fug did that happen?

The government got involved.

that could be sig worthy... plus, tons of cool old cars and rare parts were lost... it wasn't about just losing money. sucks

[JeremyAlan]

how the fug did that happen?

The government got involved.

that could be sig worthy... plus, tons of cool old cars and rare parts were lost... it wasn't about just losing money. sucks

+1
like the youtube vid of them locking up the motor on a older vette.
my local junkyard has EXPLODED with C4C. they paint big white and red X's on the motors because you cannot use any of the parts.

[bottlefed97]

Cash for clunkers is stupid, but it came at the right time for me. I have gotten soooo many cheap parts I need to repair my car lol. Examples:

Perfect Black Cobra R Hood - $50
Two Perfect fenders and a header panel - $80
Two Perfect Black Airbags - $50

I have saved so much money it's ridiculous

[uncltrvlnmatt]

Cash for clunkers is stupid, but it came at the right time for me. I have gotten soooo many cheap parts I need to repair my car lol. Examples:

Perfect Black Cobra R Hood - $50
Two Perfect fenders and a header panel - $80
Two Perfect Black Airbags - $50

I have saved so much money it's ridiculous

It's good to see that the "Hope and Change" worked out good for somebody.