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Did the government lie about the number of clunkers that were traded in during the CARS program?

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September 04, 2009 – Comments (14)

I just came across an interesting article this morning.  Before I post the link I need to preface this by saying that while Edmunds.com sometimes provides accurate, useful information...sometimes they are waaaaay off on their auto sales forecasts, "True Cost of Incentives," and other reports that they publish.  Heck they stated before the whole Cash for Clunkers program that they didn't think that it would have a large impact upon auto sales.  So that's one example of a major mistake that they have made just a couple of months ago.

Having said this, this press release is interesting:

Edmunds.com Tallies "Cash for Clunkers" Numbers; Uncovers Another Discrepancy

Here's a quote from it:

August was perhaps the strangest month in automotive history. Thanks to "Cash
for Clunkers," there was an unprecedented range in analyst`s sales forecasts.
Now that the numbers are out, analysts at Edmunds.com, the premier online
resource for automotive information, have reviewed how things actually played
out, and have uncovered some mysteries in the process.

For example, the government`s press release reported that the program took
690,114 "clunkers" off the road. However, Edmunds.com`s experts tracking the
program report that "clunker" trade-ins never accounted for more than 33.4
percent of weekly sales.

"It is mathematically impossible for there to have been nearly 700,000 new car
sales during the course of the program, given the actual sales numbers announced
by automakers who should have no motive to under-report," remarks Edmunds.com
Senior Statistician Zhenwei Zhou, PhD. "The prominence of that number in the
media does help to explain why some analysts` sales forecasts were way too
high."

One possible explanation for the discrepancy is that consumers were allowed to take advantage of the Clunkers program on ordered vehicles. Perhaps some of those orders are in the system and they will be counted in the September sales totals when they are actually physically delivered to consumers.

Either way, it would not surprise me in the least if the government CARS program ended up being extremely wasteful, with way too much overhead and leaks in the system that took away money which could have been used on trade-ins.  In which case itis possible that someone or multiple individuals who were involved in the program fudged the numbers to make it look more effective than it really was.  I don't know whether this was the case or not, but always take the numbers with a grain of salt my friends.

There certainly will be a dramatic drop in September auto sales, however this drop might not be as large as I initially thought it would be if A) there are a number of vehicles that consumers ordered during the CARS program that weren't delivered until this month and B) the effectiveness of the program was exaggerated meaning that there was slightly more "real" demand for autos last month than many believe.  Interesting stuff.

Deej

14 Comments – Post Your Own

#1) On September 04, 2009 at 8:25 AM, alstry (35.87) wrote:

Despite our differences...nice pick up.  It is always good to see creative work.

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#2) On September 04, 2009 at 8:45 AM, minduza (< 20) wrote:

Heck they stated before the whole Cash for Clunkers program that they didn't think that it would have a large impact upon auto sales.  So that's one example of a major mistake that they have made just a couple of months ago.

I don't think they made a mistake, at that time government was talking aboult one billion for "cash for clunkers" and ended up with 3 billion.

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#3) On September 04, 2009 at 9:46 AM, TMFDeej (99.27) wrote:

If I recall correctly, Edmunds was quoted as saying that even the initial billion that was allocated for the program wouldn't make that big an impact because so few people would take advantage of it.

Deej

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#4) On September 04, 2009 at 10:19 AM, Option1307 (29.92) wrote:

The government lie/fudge official numbers?

No way Deej *cough* unemployment *cough*!

This is a good find here, whether it turns out to be correct or not, it still brings up an interesting point. Does anyone else find it sad that we as a society are now starting to question and doubt almost every number the government throws at us? I mean critical thinking is always a good idea, but I feel its more than that. Does anyone honestly believe government numbers at first glance anymore, I sure don't and always try to dig around on my own. That's a really sad thought and the fact that we don't trust the gov. numbers should be a telling sign...

There certainly will be a dramatic drop in September auto sales

I completely agree with you here and this was one (of many) problems I had with the program. It simply created artificial demand. Putting aside the size of the drop, I'm thinking this could cause the automakers more pain than good in the end.

Currently, everybody is excited at the car manufacture plants, demand has returned, plants have reopened, life is good! But when the artificial demand drys up soon, the whole closing down and tightening of the company's belt has to happen all over again. I see this as being hard to swallow, euphoria back into the pits, never an easy transition. Time will tell.

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#5) On September 04, 2009 at 11:59 AM, leohaas (33.49) wrote:

Sure, the government lies about statistics! It is all one big conspiracy, just like the moon landing...

Deej, I expect that kinda opinion from many of the vocal CAPS bloggers, but not from you.

But to be serious, wasn't the first billion gone in July? Doesn't that mean that about a third of the total number of "clunkers" was reflected in the July sales?

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#6) On September 04, 2009 at 12:33 PM, Option1307 (29.92) wrote:

Sure, the government lies about statistics! It is all one big conspiracy, just like the moon landing...

You don't think the governent uses some sketchy, at best, accounting standards to calculate the official unemployment?

I'm not one to believe/support conspiracy theories, and maybe the government isn't directly lying, but at the very least they seem to be presenting the data in an intentionally misleading manner, no?

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#7) On September 04, 2009 at 12:35 PM, davejh23 (< 20) wrote:

leohaas,

I don't know if the government was lying.  However, there were less than 50,000 sales logged when they were declaring that the first billion had been exhausted.  I'm sure they had some reports suggesting that there had actually been 5 times as many sales, but you have to admit that the program was disorganized at best.

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#8) On September 04, 2009 at 1:53 PM, TMFDeej (99.27) wrote:

I hardly think that I'm talking about a huge, grassy knoll, we never landed on the moon, black helicopters are following me sort of conspiracy here. 

Lies or ineptitude, either way something doesn't add up with the reported statistics.  I strongly suspect that the overhead costs for this poorly run program (delays in paying dealers, constantly crashing registration site, mass confusion caused by the constantly changing rules and deadlines) were way more than anyone in Washington would care to admit.  Fudging the number of people who took advantage of the program would be one way to cover that up. 

The same sort of thing can be seen with the idiotic birth / death model that the BLS employs when calculating the employment numbers.

I'm far from a conspiracy theorist nut job, but it is Pollyanna to think that everything that the completely honest politicians (that certainly is an oxymoron) and others in Washington tell us is 100% accurate.  Perhaps it is more the fault of complete ineptitude or lack of effort rather than deliberately misleading the public, but the reported numbers often don't make sense.

Deej

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#9) On September 04, 2009 at 2:03 PM, nottheSEC (80.75) wrote:

Lie is such a harsh word. It is simply subject to revision. The government is the only one who can get away with this. I cannot simply say I didn't take out the trash subject to revision that I may.

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#10) On September 04, 2009 at 2:04 PM, nottheSEC (80.75) wrote:

Lie is such a harsh word. It is simply subject to revision. The government is the only one who can get away with this. I cannot simply say I didn't take out the trash subject to revision that I may.

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#11) On September 04, 2009 at 2:04 PM, nottheSEC (80.75) wrote:

Lie is such a harsh word. It is simply subject to revision. The government is the only one who can get away with this. I cannot simply say I didn't take out the trash subject to revision that I may.

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#12) On September 04, 2009 at 2:04 PM, nottheSEC (80.75) wrote:

Lie is such a harsh word. It is simply subject to revision. The government is the only one who can get away with this. I cannot simply say I didn't take out the trash subject to revision that I may.

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#13) On September 04, 2009 at 2:06 PM, nottheSEC (80.75) wrote:

dang I am very sorry folks my face is red. My computer is freezing did not intend to post this 4 times.Strangely enough it is a government computer as I work for NYC.Darn that was strange sorry again.

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#14) On September 04, 2009 at 3:33 PM, rofgile (99.25) wrote:

For example, the government`s press release reported that the program took
690,114 "clunkers" off the road. However, Edmunds.com`s experts tracking the
program report that "clunker" trade-ins never accounted for more than 33.4
percent of weekly sales.

 

--- Why would this be wrong?  3 billion dollars were spent, and if the average vehicle required 3500-4500 from the government, the number of 700,000 would be correct.  3500 * 700000 = 2.4 billion dollars.  4500 * 700000 = 3.15 billion dollars.  The sales were a mix between 3500 and 4500 discounts based on mileage improvements.

 If they are going to claim that the math is impossible, it would be much more believable if they showed their "math".

 -Rof 

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