Taxpayers' real cost of Cash for Clunkers: $24,000 a car, Edmonds.com analysis says
Taxpayers ended up paying an average of $24,000 per vehicle for the Cash for Clunkers program over the summer when sales that would have happened anyway are taken into consideration, says car buying research site Edmunds.com.
The program, which cost taxpayers $3 billion, gave car buyers up to $4,500 in incentives to trade in their gas-guzzling clunkers to buy new fuel thrifty cars. It was intended primarily to spur sales, and the economy.
But Edmunds.com says a lot of those sales would have happened anyway, with or without the clunkers program. Of more than 690,000 vehicles sold, only about 125,000 of the sales were entirely due to the government's added inducement, Edmunds.com says. The rest of buyers just got lucky by getting the government to kick cash into deals that they would have proceeded with anyhow. When the cost of the program is spread over just those extra incremental sales, the total is $24,000 per vehicle.
That's just about $2,000 shy of the average amount paid for a new car by buyers in August, $26,915.
To conduct the analysis, the Edmunds.com looked at the sales trend for luxury vehicles and others not included in Cash for Clunkers. It then applied those sales against the total adjusted sales rate of all cars to make estimates. "These estimates were independently verified through careful examination of sales patterns reflected by transaction data," it says.
“This analysis is valuable for two reasons,” said 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.”
