Cash for Clunkers Results Finally In: Taxpayers Paid $24,000 per Vehicle Sold, Reports Edmunds.com
FOR IMMEDIATE RELEASE
Cash for Clunkers Results Finally In: Taxpayers Paid $24,000 per Vehicle Sold, Reports Edmunds.com
SANTA MONICA, Calif. — October 28, 2009 — Edmunds.com, the premier resource for online automotive information, has determined that Cash for Clunkers cost taxpayers $24,000 per vehicle sold.
Nearly 690,000 vehicles were sold during the Cash for Clunkers program, officially known as CARS, but Edmunds.com analysts calculated that only 125,000 of the sales were incremental. The rest of the sales would have happened anyway, regardless of the existence of the program.
Ironically, the average transaction price for a new vehicle in August 2009 was only $26,915 minus an average cash rebate of $1,667.
"This analysis is valuable for two reasons," explained 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. For example, October sales are up, but without Cash for Clunkers, sales would have been even better. This suggests that the industry's recovery is gaining momentum."
The chart below sets forth actual SAAR (Seasonally Adjusted Annual Rate) compared to Edmunds.com's forecasted rate if the program had never been implemented.
| Actual (or Forecast) | If no Cash for Clunkers | Difference | Sales Volume | |
|---|---|---|---|---|
| Jan '09 | 9.59 | 9.59 | n/a | 654,922 |
| Feb '09 | 9.14 | 9.14 | n/a | 687,182 |
| Mar '09 | 9.69 | 9.69 | n/a | 855,146 |
| April '09 | 9.20 | 9.20 | n/a | 817,096 |
| May '09 | 9.85 | 9.85 | n/a | 923,141 |
| Jun '09 | 9.67 | 9.80 | -0.13 | 857,447 |
| Jul '09 | 11.22 | 10.11 | 1.11 | 995,216 |
| Aug '09 | 14.06 | 10.45 | 3.61 | 1,258,747 |
| Sep '09 | 9.19 | 10.63 | -1.44 | 744,367 |
| Oct '09 | 10.40 | 10.89 | -0.49 | n/a |
| Nov '09 | 10.40 | 10.82 | -0.42 | n/a |
| Dec '09 | 10.61 | 10.85 | -0.24 | n/a |
"Our research indicates that without the Cash for Clunkers program, many customers would not have traded in an old vehicle when making a new purchase," Edmunds.com Senior Analyst David Tompkins, PhD told AutoObserver.com. "That may give some credence to the environmental claims, but unfortunately the economic claims have been rendered quite weak."
To conduct the analysis, the Edmunds.com team of PhDs and statisticians examined the sales trend for luxury vehicles and others not included in Cash for Clunkers, and applied the historic relationship of those vehicles to total SAAR to make informed estimates. These estimates were independently verified through careful examination of sales patterns reflected by transaction data. Once the numbers were determined, Edmunds.com's analysts divided three billion dollars by 125,000 vehicles to arrive at the average $24,000 per vehicle.
Coincidentally, a parallel analysis of the first-time homebuyer credit was reported yesterday by MIT Sloan Professor Simon Johnson and Yale law student James Kwak, who both blog about economics at The BaseLine Scenario.
About Edmunds
Edmunds publishes four Web sites that empower, engage and educate automotive consumers, enthusiasts and insiders.
Edmunds.com, the premier online resource for automotive consumer information, launched in 1995 as the first automotive information Web site. Its most popular feature, the Edmunds.com True Market Value®, is relied upon by millions of people seeking current transaction prices for new and used vehicles. Edmunds.com was named "Best Car Research Site" by Forbes ASAP, has been selected by consumers as the "Most Useful Web Site" according to every J.D. Power and Associates New Autoshopper.com Study(SM), was ranked first in the Survey of Car-Shopping Web Sites by The Wall Street Journal and was rated "#1" in Keynote's study of third-party automotive Web sites. Inside Line launched in 2005 and is the most-read automotive enthusiast Web site. CarSpace launched in 2006 and is an automotive social networking Web site and home to the oldest and most established automotive community. AutoObserver.com launched in 2007 and provides insightful automotive industry commentary and analysis. Edmunds is headquartered in Santa Monica, California, and maintains a satellite office in suburban Detroit.
