Cash for Clunkers Tab: $24,000 Per Vehicle of Taxpayer Cash

By Michelle Krebs October 28, 2009

This summer's so-called Cash for Clunkers program cost taxpayers $24,000 per vehicle sold, Cash for Clunkers car - 255.JPGaccording to an analysis by Edmunds.com.
 
Nearly 690,000 vehicles were sold during the Cash for Clunkers program, officially known as the Car Allowance Rebate System (CARS), but Edmunds.com analysts indicate that only 125,000 of the sales were incremental. The rest of the sales would have happened anyway.

Analysts divided three billion dollars by 125,000 vehicles to arrive at the average $24,000 per vehicle sold. The average transaction price in August was $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, Anwyl pointed out, 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," he said.

Edmunds.com's research further indicates that without Cash for Clunkers, many customers would not have traded in their old vehicles.

"That may give some credence to the environmental claims, but unfortunately the economic claims have been rendered quite weak," said Edmunds.com Senior Analyst David Tompkins, PhD.

The below chart sets forth actual SAAR (Seasonally Adjusted Annual Rate) compared to the forecasted rate if the program had never been put into practice.

Sales Impact of Cash for Clunkers

 

 

 

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

  Source: Edmunds.com

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accordfreak says: 9:52 AM, 10.29.09

Maybe someone can clarify this data a bit? How does Edmunds figure an incremental increase of 125,000 cars? In the above table, what does forcast mean: for April 09, is 9.2 a percentage? Is it 920,000 cars? It seems the goals of the program were to get less efficient cars off the road as well as stimulate demand. While its true the poeple that bought cars were probably going to buy them any way, I think the program got them into the maket sooner rather than later; plus I'd bet that sales prices in Oct for an 09 car are lower than in July or Aug. How do you add in the value of reduced oil consumption, pollution into all this? I'm not carry water for any body, but this analysis seems to lack tranparency.

obamaajoke says: 11:13 AM, 10.29.09

Cash for Clunkers costs tax payers $24,000 per vehicle! What a shocker...

Another brilliant idea to put American tax payers in even more debt!

WOW…our country is in the worst debt in the history of the United States!

But hey, let’s still blame Bush for it. Hahahahhahhahaaaaa…….

obamaajoke says: 11:37 AM, 10.29.09

Also, maybe if someone didn't add an additional $1,000,000,000,000 (yes that is 1 trillion) in his first year in office maybe we wouldn't have to worry about stimulating demand in the market of buying a new car faster! How can you even pull the "reduced oil consumption/pollution" part of things in to this topic? Are tax payers now responsible for making sure a person gets to the dealership to buy a new car just because their car burns oil? Give me a break!

Thanks

jmannering says: 8:03 PM, 10.29.09

It is by no means clear what is set forth in the chart above, apart from the fact that the number 125,000 does not appear. How did your analysts arrive at this number? We want to see the arithmetic. We want to see the arithmetic because we all want to believe that we can trust the numbers that pop up on the screen at Edmunds.com.

jimmychowda says: 10:07 AM, 10.30.09

Are you people that bad at math? You take the sales before cash for clunkers and the sales after cash for clunkers and use that trend line for the months of the program. Any sales above that trend line are sales attributed to CFC's. The dropoff from when the program ended is subtracted from the trendline as people obviously pushed up purchases to get the free monies. THIS IS 9th GRADE MATH PEOPLE!!!!!!! Sheesh!

owlafaye says: 8:09 PM, 10.30.09

Edmunds wanders outside of their narrow field of knowledge and wonder why they are called to task? Laughter

MTuzmen says: 7:03 AM, 10.31.09

Agree in general with The White House. You have to look closely at the PECUNIARY effects on the economy which in this case yells out positive. Our perception of the clunkers is that they simply guzzled gas, minimised the return on investment made in maintenance done on them, slowed down the traffic and therefore led to excessive consumption of time+money+energy+etc., weren't offering their drivers much of today's vehicle safety features. Every new car sold in exchange of such a vehicle generated 'additional' tax income to the state, to the federal government, sales revenues for the dealer & the manufacturer-i.e. subject to further tax revenues on the federal budget- and helped the auto industry bail-out money being funded by the borrowers at a proportion. The roads got cleared off the junk. More can be said... The calculation practised by Edmunds.com is a little out of my capacity but looks like a good earthly(not for Mars) excercise.

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