The Recession

Edmunds.com Rips Cash for Clunkers; Obama Admin Responds

| by DeepDiveAdmin

The White House has fired back at mega site Edmunds.com for claiming the recent Cash for Clunkers program was a costly failure.

According to the car-buying Web site, American taxpayers paid an average of $24,000 per vehicle for the wildly popular Cash for Clunkers during the summer of 2009, when sales that would have happened anyway are taken into consideration.

The program, which ultimately cost taxpayers $3 billion, gave car buyers a maximum $4,500 in incentives to trade in a gas-guzzling older car in exchange for a new, fuel-thrifty car. It was intended primarily to spur sales, and the economy.

But Edmunds.com says many of the sales would have happened anyway, with or without the program. Of more than 690,000 vehicles sold, only about 125,000 of the sales were truly due to the government's incentive, Edmunds.com says. The rest of the buyers simply 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, Edmunds.com claims, the total is $24,000 per vehicle.

Not true says the Obama Administration. The White House called the analysis "faulty" on its Web site's blog, saying Edmunds has been breathing too much clunker exhaust.

"This analysis ignores not only the price impacts that a program like Cash for Clunkers has on the rest of the vehicle market, but the reports from across the country that people were drawn into dealerships by the Cash for Clunkers program and ended up buying cars even though their old car was not eligible for the program," the blog says.