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

[WriteDown]

Source: Edmunds.com

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.....

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

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Chart is at link.

[Name removed]

1. Deleted message

Message removed by moderator. Click here to review the message board rules.

[Schema Thing]

2. Something seems really off in this "study"

And I sure wish they'd break down on a per car basis how that 24K breaks out.

[WriteDown]

4. Edmunds is usually on the mark when it comes to anything....

"cars." The only thing I do not like about them is that they tend to be just a bit biased toward Japanese makers.

[napi21]

3. Their logic is questionable!I'd be interested to hear what

assumptions they made on 690,000 customers.

[Craftsman]

5. I bought a ford ranger in C4C in August

I would have bought it anyway.

[skipos]

7. I bought a Ford Fusion hybrid

and I wouldn't have bought it without CFC.

[On the Road]

6. That is an Odd Set of Numbers

They are comparing actual sales against a previous forecast, and apparently in some months two different forecasts. We are not told when the two forecasts were made, whether they were simulaneous, or in what month the actual sales change to forecasts. There are also no details given of how the forecasts were developed.

However, in the absence of that information, the sales without the Clunkers program seems much too robust for the empty auto lots that were universally reported earlier in the year.

Having said that, it is a valid point that not all the Clunkers sales were incremental. If only one out of three sales was incremental, the program did in fact cost $24k in taxpayer money for each new car.

Cash for Clunker is not good policy for normal times. It was implemented largely to save the auto industry and stem the crash. Perhaps it did that, but it would require a different analysis.

[SoCalDem]

8. are they figuring in how much aid would have been paid to those car salesmen

who were set to lose their jobs? or for the savings for the auto workers who got called back?

[Igel]

13. It's a bad game to play.

Once you start down that road, you have no end of questions, silly and substantive.

For example: How many people could get extended SS benefits in 2070 were it not for the debt payments on the money used for CfC?

What's the contribution to greenhouse gas emissions from kids born to parents who, feeling less insecure, decided to have an additional child?

Seriously. The serried ranks of implications go stretching out into 4D space-time.

[emulatorloo]

9. "but without Cash for Clunkers, sales would have been even better"

Somebody needs to recrunch these numbers. I call BS on this analysis. I am no math or eco whiz, but they are ignoring something or screwing something up with their calculations.

[Obamanaut]

10. I'm sure that if it were a government report, this sort of thing would

never be suspected. "...but they are ignoring something or screwing something up with their calculations..."

:sarcasm:

[Igel]

15. Why?

Look at it this way: You're saving up to buy a new car in a few months, or you think you can afford $13k but not $15k for a new car right now. You're not in the market.

All of a sudden a good deal comes along. You can get that $15k new car for $13k. And that additional money you were saving up for a downpayment? You don't need it.

You take the deal.

Now, you might have had money in October or November, but you bought in August. You might have waited a year, but you bought during the good deal. That means instead of being in the market now, or a few months from now, you were in the market then.

It was a known consequence. Think of it as looking at a nice graph with sales on it. Now you rake some of the sales into a little heap.

If you're still not convinced, ponder this: All those clunkers would be off the road in 30 years' time. The question would have been, When would they have been replaced? Instead of projecting out and sprinkling those replacements over the next 30 years--with fewer replaced each year because there are fewer to be replaced--you get them all in a little heap.

[Winterblues]

20. Except people were not buying any new cars even with other incentives.

The car companies were going bankrupt in a hurry. They did not have any sales lined up. Without the cash for clunkers program more than a thousand dealers would have had to close their doors. This study is distorted to say the least..

[girl gone mad]

22. They are talking about October sales, and they are correct.

C4C pulled demand forward.

[DainBramaged]

11. So totally wrong in so many ways it isn't funny

the CFC #1 sellers were UNDER $20,000, with a MINIMUM rebate of $3500.So where they get their statistics is complete unknown.


Top sellers

Toyota Corolla
Ford Focus
Honda Civic
Toyota Prius
Toyota Camry
Hyundai Elantra
Ford Escape
Dodge Caliber
Honda Fit
Chevrolet Cobalt

Vehicles in bold have SELLING prices UNDER $20,000.

[Igel]

14. "Average."

That's all you really needed to read.

[DainBramaged]

17. You don't seem to understand, taxpayers DIDN'T pay ANYTHING other than

the rebates (max $4500) and the administrative cost by the Department of Transportation, and those costs certainly didn't equal $20,000 per car, the MOST the administrative cost were from a report I no longer have a link to was ABOUT $350,000,000 which is about $500 per car.


Right wing propaganda, sorry you (like the Right-wingers I work with), believe it.

[girl gone mad]

23. It really isn't that complicated.

Most of the people who bought a car under the program would have bought a car anyhow. the government spent $3B to attract 125,000 additional buyers.

Therefore, the cost of the stimulus was $24,000 per additional buyer.

Expensive, but much cheaper that the new home buyer tax credit, which is costing us $43,000 per additional home buyer.

http://www.ritholtz.com/blog/2009/10/why-expanding-home-buyers-credit-is-a-mistake/

There's nothing right wing about it. It's just simple economic analysis.

[Sen. Walter Sobchak]

29. I'm one of them and still think C4C was a stupid idea.

I was going to buy another car and I traded in a horrible old Bronco II that my girlfriend has has since she was sixteen. She decided that she could get by with only three cars (don't get me started) and offered me the Bronco for C4C.

[maxrandb]

12. It's Bullshit, but someone smarter than I needs to smack this "talking point" down

I think their assumptions are off, but more than that...here's why I call Bullshit!!!

1. Happened to catch a little of Train Wreck Beck this morning, and low and behold, who called in???? The head of this Edmunds place.

2. After getting my Pancit and Lumpia, I got back in the car, and who was touting these numbers???? None other than the bloviating-race-baiting Limbaugh.

So Edmunds cooks these numbers, and voila! Their boss calls into the Glenn Beck Show.

I think that tells me all I need to know about Edmunds.com

I've never been to their site or used them before, but I'm adding them to one more place I'll never visit due to their association with Train Wreck Beck

Perhaps the general public should be aware that the head of Edmunds appears to be a Beck supporter.

[Barack_America]

16. +1

Thanks for the heads up.

[Romulox]

19. Very basic distillation of Edmunds.com argument:

a) 690,000 people took advantage of C4C;

however

b) only 125,000 of those sales were actually induced by C4C--the rest would've taken place with or without the program...

so

c) divide the cost of the program ($3 B or so) by 125,000 to arrive at the cost per car sale induced.


It's a decent argument, inasmuch as proposition b) can be established. But I'm not necessarily endorsing it.

[Karmadillo]

21. Thank you. Makes sense. Stands to reason not everyone who bought

a car during the C4C period bought only because of C4C.

[taught_me_patience]

25. These numbers are valid

and this must be the method to analyze the program. Also, you can analyze how many of the 125k "incremental" sales were truly incremental or whether it was demand shifting. I'd guess that over 50% of those "incremental" sales were really demand shifting from another time. We'll never really know, but we'll have a much better picture after the next several months of sales.

[girl gone mad]

24. What's to smack down?

The numbers look totally valid to me.

[Romulox]

18. Whether you agree with Edmunds methods or not, most of the money went to Toyota, Honda, Hyundai...nt

[high density]

26. GM and Ford were #2 and 3 in CARS sales behind Toyota.

http://www.nytimes.com/2009/08/27/business/27clunkers.html?_r=2&hpw

Toyota, Honda, Hyundai = 39.6%
GM, Ford, Chrysler = 38.6%

So I guess one could also say that "most of the money went to GM, Ford, Chrysler."

[Romulox]

27. You could, but only if you didn't know what "most" means...

:hi:

[JonLP24]

28. I'm not good with numbers

However local car dealers as showcased on the local news showed that their businesses improved through CFC and many were sad to see the program coming to an end. Surprising they would say considering how red Maricopa County is but anything to help the economy if it's only temporary.