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Cash for clunkers cost you $24,000 per car.

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October 29, 2009 – Comments (7)

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Cash for Clunkers cost $24,000 per carEdmunds.com says only 125,000 vehicle sales were a result of the government's program.Posted by Elizabeth Strott on Thursday, October 29, 2009 10:54 AM

The U.S. government is calling its Cash for Clunkers program a big success, with nearly 690,000 vehicles sold in July and August. But a report by automotive Web site Edmunds.com says the program actually cost taxpayers $24,000 per car sold....

 

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7 Comments – Post Your Own

#1) On October 29, 2009 at 1:38 PM, brickcityman (< 20) wrote:

Is it possible they are just working from inflation adjusted numbers?

 

;-p

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#2) On October 29, 2009 at 1:46 PM, catoismymotor (< 20) wrote:

Don't say the "I" word! I don't wish to replace my wallet with a wheelbarrow!

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#3) On October 29, 2009 at 2:20 PM, Deepfryer (28.11) wrote:

Maybe I'm just stupid, but I don't think it's accurate to say that cash for clunkers cost us $24,000 per car. They only paid a refund of what, $4500 per car, right?

From the article:

"The analysts then divided the $3 billion by their 125,000-vehicle number to get an average of $24,000 per vehicle."

This seems oversimplistic to me.

For one thing, how exactly did they come up with the 125,000 estimate? They didn't provide their methodology.

Second, and more importantly, did the gov't actually spend all $3 billion that was set aside for the program? Where did it go, if it wasn't used for rebates??

I know the gov't isn't perfectly efficient (to say the least), but I still find it highly unlikely that 81% of the money simply disappeared into thin air. My guess is that Edmonds.com was a little too creative with their so-called "calculations".

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#4) On October 29, 2009 at 2:24 PM, Entrepreneur58 (36.64) wrote:

<<>>

For the cost of the US budget deficit for 2009 the government could hire 50 million workers for a year at a wage of $14 an hour.  Mind-numbing, isn't it?  It just shows you how fake most of the economy really is.

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#5) On October 29, 2009 at 2:42 PM, miteycasey (30.21) wrote:

Only 125,000, or 18%, of the sales were incremental, according to Edmunds.com -- the remaining 82% of sales would have happened regardless of the program.

Edmunds is suggesting that those purchases would have happened with or without the 'cash-for-clunkers' program. They are probably correct.

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#6) On October 29, 2009 at 10:24 PM, hall9999 (99.21) wrote:

  The estimate sounds reasonable but I think the time period over which those sales regardless would have happened makes a big difference.  If the remaining 82% would have happened "regardless" in August that's one thing but if it's spread out over the next five years then that's something else.

  The goals of the program were to 1) help stimulate the economy 2) reduce carbon emissions 3) reduce our dependence on foreign oil 4) help consumers save money by spending less at the pump.

1 - one could argue it did do.

2,3,4 - the sooner those "clunkers" are traded in for more fuel efficient cars the better.

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#7) On October 29, 2009 at 10:35 PM, dibble905 (< 20) wrote:

Those sales would have happened anyway? With the way the spending patterns were trending? I highly doubt it - maybe in a normal economy.

Although the $24,000 figure is unreasonable, an amount 1/3 to 1/2 of that might be more reasonable.

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