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The federal government's $3 billion investment in last summer's Cash for Clunkers program ended up costing taxpayers $24,000 per vehicle that would not have been sold anyway, according to an analysis by an Edmund.com team of Ph.Ds and statisticians.
The White House has its own take, of course, prompting a rebuttal from Edmunds.com CEO Jeremy Anwyl.
Edmunds.com prides itself as “the premier resource for online automotive information,” and claims that although 690,000 vehicles were sold under the program, only 125,000 were incremental sales, yielding the $24,000 figure.
Interestingly, as pointed out in an Oct. 28 Edmunds.com press release, the average transaction price in August for a new vehicle was only $26,915 minus an average cash rebate of $1,667.
But a day later, The White House Blog posted a response charging, “Edmunds.com has released a faulty analysis...” arguing that Edmunds' analysis didn't account for anecdotal evidence that car sales picked up for vehicles that didn't qualify for the Cash for Clunkers program. The blog went as far as to accuse Edmunds.com of acting as if these other sales were taking place “on Mars” and that 4th quarter GDP numbers would benefit as automakers increase production to rebuild inventories.
Anwyl responded: “The key question is how many of these sales would have occurred anyway.” Still, the CEO fires back arguing that it's “a bit odd” that consumers would buy vehicles based on a program for which they don't qualify when prices were pushed up by the program thus creating a disincentive for purchases.
As to the blog's claim of increased production in the 4th quarter, Anwyl writes, “No manufacturer increases production — a decision with long-term consequences — based on the 30-day sales blip triggered by an event like Cash for Clunkers.”
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