PrintOctober 29, 2009
Least surprising headline: Cash for Clunkers a boondoggle
So, all the clunkerless car owners think they got a good cash for clunkers deal? Think again. Following on Randy Fardal's analysis yesterday in AT, comes a study by edmunds.com, as reported by Mark Trumbull in Christian Science Monitor
A valid way to evaluate the program economically, it says, is to look at how many people purchased cars that otherwise wouldn't have been bought. The firm says that number is about 125,000 cars. By that measure, the government spent $24,000 to generate each sale of a new car.
For comparison, the average price for a new vehicle in August 2009 was $26,915, minus an average cash rebate of $1,667.
In all, the government spent $3 billion on a program that provided cash toward 690,000 car purchases - about $4,348 per car. That makes 565,000 people who got as much as $4,500 to buy a car they would have bought anyway, according to the Edmunds analysis.
Therefore, despite the trumpeted claims and pictures of crowds in previously deserted auto showrooms
"The economic claims have been rendered quite weak," David Tompkins, one of the researchers, said in Edmunds' AutoObserver.com, an online publication. Still, the clunker program did help stimulate some car sales at a very weak moment for automakers.
The program also may have some environmental benefits.
Meanwhile auto showrooms are deserted once again--and there are reports of clunkers, which were to be destroyed to decrease supposed harmful auto emissions, back on the market. But those who couldn't afford a new car, clunker carrot or not, are now priced out of the used car--uhm pre-owned--market as there are fewer available.
A clunker of a program. So maybe the government will repeat it for another industry.
Hey, I know--clunker health care.
Hey, I know--clunker health care.
