• Oct 29, 2009
Cash for Clunkers vehicles – Click above for high-res image gallery

There 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]


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    • 1 Second Ago
  • 48 Comments
      • 5 Years Ago
      This $24,000 per car is dumb sensationalism. ALL cars sell ANYWAY eventually - never heard of new cars being scrapped because they could not be sold. The object of the Clunkers-for-Cash program was not to keep new cars from going to the scrap yard or provide cheap cars for consumers. It was to inject that little extra margin into the economy. Each additional sale creates or saves extra jobs in car dealers, manufacturing, auto parts, transportation, loan companies, etc, etc. And all those extra jobs cascade through the economy creating or saving further jobs.

      Much of that federal "investment" will come back to the federal government in income taxes.

      The program is not new - it has been done in Europe. Germany and France both had those programs much earlier than US and they are out of the recession earlier.
      • 5 Years Ago
      Not to mention the increase by 9 MPG from the clunkers traded in to the new cars. Also a huge benefit.
        • 5 Years Ago
        Minus the huge environmental cost of trashing working cars for brand new energy/resource intensive to build new cars...

        The gain in road mpg will not outweigh the environmental impact from building the cars over the life of the cars unfortunately.
      • 5 Years Ago
      I'm not entirely sure I understand the logic behind Edmound's stats and I'm not arguing either way, but someone explain to me how:

      When I traded in my cluncker for 4.5K for a 20K new car... and paid 15.5K plus tax, my purchase is costing tax payers 24K. That's more than what my new car's worth and where did the 15.5K + tax I put in for the car go despite whether I'm going to purchase a new car or not with the next year?

      Again... I'm pleading ignorance, not bias. I've read the article but it doesn't add up for me. Tax payers are paying 24K(which also means me) for my car that I took 4.5K from and paid the rest?
      • 5 Years Ago
      Typical stupid liberal democRATs fiscal policy, take the money from the right pocket, and put it in the left pocket, and say look!!! You just got more money!!! People who thinks c4c was good, they are the exact type of village idiots who voted Obama into the office who is going to spend this country into high inflation and bankruptcy!
        • 5 Years Ago
        The program WAS GOOD. It gave the automakers an infusion of cash (no need for more bailouts), changed consumer demand for the better (car sales still way up than before the program), and got dirty, dangerous, polluting cars off the road (you do know all those exhaust fumes cause cancer, heart disease, and respiratory death, right?).
      • 5 Years Ago
      You miss the point, 565,000 car's would've sold on their own without the c4c incentive. 125,000 is a small amount of gain in relation to all the taxpayer money that went into it.
      • 5 Years Ago
      Two things: 1) European nations who have done similar programs faced similar results - that is running out of money for their programs much quicker than they planned (Google it, plenty of news stories out there); and 2) A much more reasonable way to encourage buying more efficient vehicles would be to offer the same amount as a tax credit. This would have been a more gradual program, the dealers wouldn't have the angst, and it would incent people to plan for these purchases vs making the purchases like some sort of impulse buy.
      • 5 Years Ago
      Great! Fox News and others are running this on the little text strip at the bottom of the screen. They don't explain it at all, just says "Tax payers paid $24k per cash for clunker sold".

      I think Edmonds is just doing this to grab headlines. They should be just as happy about the sales considering it drove up visits to their site with people looking for info about cars they were considering.
        • 5 Years Ago
        @montoym

        Looks like your the one that didn't bother to do something, and that is to actually read my comment. I did check other stations, and that is why my comment above says "Fox News and others are running this ". I did see the same thing on MSNBC and regular CNN.

        I know you think with all the comments you make here that you own the place, but next time keep your personal attacks to yourself. Prick.

        • 5 Years Ago
        I am under the assumption Edmunds is run by American citizens who pay taxes to our Federal Government. If this is the case, those individuals may be a bit upset with how our government is deciding to spend its tax revenue.

        Driving car sales for a few months, obviously helping several thousand businesses attached to the auto industry, may not be the best way to spend 300 Million individual citizen's tax dollars plus several hundred thousand other businesses’ tax dollars not attached to the auto industry.
        • 5 Years Ago
        they are all idiots
        that's why i don't bother listening to those fools

        this spin of a story is by far the dumbest thing
        wtf, wtffffff
        • 5 Years Ago
        This is a pretty ridiculous twist on the story. It was pretty obvious from the start that this program was going to mostly draw people who were planning on buying a car in the next year since it was in no way designed to exclude them. It was originally about clunkers but instead became an economic stimulus. As such it did it's job. Like it or not it put a lot of new cars on the road and the auto industry seems to have been in recovery mode ever since. It is pretty amazing that it managed to also get that many clunkers off the road. To say the other sales were a waste is foolish. Cars are seen as disposable by most people. In a year or two a lot of those people will be looking for new ones. If you moved their sale up a year you probably also moved up the sale of the next shinny new set of wheels a year too.
        • 5 Years Ago
        Edmunds didn't ask a time frame when the buyer was likely to buy "the car", they didn't ask how strongly you were likely to do it in that time-frame, they didn't ask if the car would have been cheaper with no $4K credit, they didn't even ask if you would have seriously considered a used car.

        Edmunds was fishing for a partisan conclusion, just to attack the program, and be featured on every rightwing tv station, radio show, and website, who all have a particular hatred for what is accepted by normal people as an incredibly successful program
        • 5 Years Ago
        Considering that the scroll at the bottom of the screen is pretty much made for headlines and not complete news stories, that doesn't surprise me one bit.

        I'm also guessing that you didn't bother to check any other stations to see that they probably said something similar.
      • 5 Years Ago
      The whole title and assessment is incorrect. Even though only 125000 people who werent going to buy cars bought cars, it doesnt change the fact that 625000 people bought NEW cars, which stimulates our economy. They could have and most likely were going to buy used cars which would not have created any more economic growth, which is what the government was aiming for. And plus, just because you are planning to buy a care, doesn't mean you are actually planning on buying a car. I think a better assessment would be to compare month to month growth of car sales, which as I recall seemed to have spiked during the cash for clunkers deal. the whole 24000 for a new car is just a sensationalist headline to grab attention.

      And btw @ BoxerFanatic, I hope there is one thing that you've learned over this whole recession ordeal that our country has gone through, and it's that unrestrained capitalism (using economics terminology, the invisible hand of economics), does not work without regulation. Unrestricted capitalism does not work because it assumes people are intelligent automatically look out for their best interests. Well, all those people who invested without checking their savings accounts or who didnt check the transparency of the investments of the banks they were with proved that wrong. (and I was also a firm believer in as much unregulated capitalism as possible before the recession too)
        • 5 Years Ago
        "Unrestricted capitalism does not work because it assumes people are intelligent automatically look out for their best interests."

        Actually people do look out for their own interest. When they know the government is there to bail them out they are more willing to take the risk as the risk/reward ratio shifts drastically in their favor. You just proved the point with your statement.

        They may not internalize "If I go belly up the government will take care of me", but people certainly learn from example that there is always a way out these days, thanks to Uncle Sam. Boxer's point is that the Constitution requires government not to enter the game of moral dilemmas and unintended consequence, but it does, with a fury.
        • 5 Years Ago
        Using Edmond's rationale about dividing tax dollars by incremental increases ... The largest portion of the stimulus bill was tax cuts- $288 billion or about 100 times as much money as C4C borrowed from the future to be spent now. If you look at incremental spending... it has gone down. So it is $288 billion for negative impact on the economy.

        Even if you use the misleading Edmonds numbers and ONLY count their survey-projected incremental cars, Cash for Clunkers (which by WSJ estimates results in people spending 6 times the amount of the incentive) at least gets a 1 to 1 initial consumer spending per government dollar spent. Tax cuts come nowhere close in terms of stimulus. And you get reduced fuel consumption from C4C as well (BTW, the trade deficit impact of oil imports (the majority of the trade deficit) on US tax revenue more than outweighs the revenue from gas tax).

        No matter how you cut it from a fiscal perspective, targeted spending on programs like C4C is a dramatically better use of borrowing money from future generations than tax cuts.
      • 5 Years Ago
      "While we're not entirely sure C4C was a great idea, it's hard to argue that it spurred desperately needed economic activity."

      Actually, its quite easy to argue that.

      You are assuming that the activity was needed, when in reality it was not. The market for automobiles had/has expanded beyond what is sustainable, this is clear.

      Proping up demand through artificial means never works in the long run, and only serves as a short term boost to the industries. Consequences of this boost will include difficulty in establishing future demand, misaligned production, more costs of hiring/firing in the face of variability, etc.

      The program was a boondogle to the automotive sector and will be labeled a failure by all accords once enough time has passed. This of course is to say nothing about the cost to future generations that will have to finance the debt.

      • 5 Years Ago
      not that I neccesarily put any fate in C4C but...... that orginal billion dried up fast, they had to extend the deadline for dealerships to file paperwork, and most importantly car sales tanked the month after C4C, so yeah I think C4C attributed more to car sales than Edmunds is giving them credit for.
      • 5 Years Ago
      What a misleading article. The author should be ashamed and go work for the Dominate Liberal Mass Media Propaganda Machine. His lack of journalist integrity would fit right in.

      Using his numbers, the tax payer payed $4347 per car. 3 billion divided by 690000, NOT 125000.

      • 5 Years Ago
      So it's as easy as sending out a survey and asking the buyers? Because I'm sure they all responded truthfully. 125,000 cars sold BECAUSE of C4C or 125,000 people responded that they bought because of C4C, which is it? Does it really matter? This kind of "jounalism" makes me sick.
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