- Oct 29, 2009
Edmunds: Cash for Clunkers cost taxpayers $24k per car, not $4k
Cash for Clunkers vehicles – Click above for high-res image galleryThere is little doubt that Cash for Clunkers gave auto sales a big boost in late July and most of August, but there has been considerable debate as to how much help taxpayers' $3 billion provided. Customers who purchased a new car or truck were rewarded in many ways, especially when you consider the U.S. government paid out a median price of about $4,000 per clunker. Those customers are also saving at the pump, as each car turned in was 4-10 mpg better than the vehicle it replaced. Dealers sold more cars. States received more tax dollars. So the program was a success, right?
If you believe the statistical analysis of Edmunds, perhaps the program wasn't so terrific after all. The industry research juggernaut claims that of the 690,000 vehicles sold under the program, only 125,000 of those sales went to people who weren't going to purchase a new car in 2009. The result, says Edmunds, is that the $3 billion spent for C4C ended up spurring only 125,000 sales at a cost of $24,000 per vehicle. Further, Edmunds claims that October's sales would have ramped up even more than what current projections indicate.
There doesn't seem to be too many industry experts who disagree with Edmunds' assessment that the Clunkers program only generated 125,000 additional sales, but C4C wasn't just about selling cars and trucks. Ford industry guru George Pipas told CNN Money that the Blue Oval feels the program was a success, adding "The whole purpose of the program was to provide some kind of catalyst to kick-start the economy, and by all accounts the extra production that was added this year was a boost to the economy."
While we're not entirely sure C4C was a great idea, it's hard to argue that it spurred desperately needed economic activity. Dealers were able to pay their staffs, OEMs ramped up production at plants to keep up with new demand, beneficiaries of C4C were able to upgrade their rides, and some of the road's biggest eyesores were given a sodium silicate death sentence – surely that's worth something.
[Source: CNN Money | Image: Ethan Miller/Getty]