Study: 'Cash for Clunkers' Cost Taxpayers $24K Per Car
Darryl R. Isherwood
FOXBusiness
The federal government’s “Cash for Clunkers” stimulus program accounted for just 125,000 new car purchases and cost taxpayers $24,000 per car sold, according to a study by Edmunds.com.
The remainder of the 690,000 vehicles sold during the program would have been bought regardless of government intervention, the study claimed.
“Our research shows that without the Cash for Clunkers program, many customers would not have traded in an old vehicle when making a new purchase,” said Edmunds.com senior analyst David Tompkins.
Tompkins said the cost of the program was also questionable. The total cost to taxpayers was nearly $3 billion, or $24,000 for each of the 125,000 additional cars sold. At that price was it the government's best use of money?
"That’s about what the average car costs," Tompkins said. "It seems like that’s a fairly high cost for the benefit. You could have just bought the people the cars and spent the same amount. There are other ways that money could have been spent that might have produced a bigger benefit."
And while car sales rose from September to October, the Edmunds study shows that the increase would have been higher without the program.
Economist Sophia Koropeckyj said the program was successful in that it helped clear out stagnant dealer inventory, but in terms of new car sales, it merely created a shift.
"The whole idea is the cars would have been replaced sooner or later,” said Koropeckyj, a managing director at Moody’s Economy. “Rather than replacing the vehicle a year from now they were replaced sooner. What’s unclear is whether it was shifted by a few months or six months or a year.”
Edmunds CEO Jeremy Anwyl said the calculations of the cost and the limited benefit should not come as a surprise to anyone who has studied economic incentive programs..
"Any time there is an incentive program you are always encouraging people to do something that they would have done anyway maybe a little bit earlier," Anwyl told FOX Business. "But it shouldn’t be a huge shock, anyone that has looked at incentive programs recognizes these things are very expensive and this one is no exception."
Thursday, a White House spokesman criticized the numbers from Edmunds, saying the analysis goes against sales numbers and differs with "reality."
In response, Anwyl said the assessment was based on mathematical calculations of sales trends, not speculation.
"This is based on a statistical analysis, this is not my opinion," he said. "There is some math here we'd be happy walk anybody through."
And while the White House has often touted the environmental benefit to the program as low gas mileage cars were exchanged for more fuel efficient models, Tompkins said the benefit may not have been as significant as advetised. The way the rules for the program were written, light trucks, such as pick-ups were one of the most popular new cars sold.
"A lot of what was reported were small cars being sold, but large pick-ups were some of the biggest sellers," he said.
"Cash for Clunkers" provided new car buyers trading in older gas guzzlers with up to $4,500 in rebates. Auto sales spiked in July and August, but fell in September when the program ended.
AND YOU STILL WANT MORE GOVERNMENT IN YOUR LIFE ?
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