Friday, October 30, 2009

Cash For Clunkers Follow Up

Shortly after the government's Cash For Clunkers program ended, I posted about the initial results of the program.  At the time I tried to identify the "winners" and "losers" of the program.  Here is what I said at the time:
So the big winners in the "Cash For Clunkers" program are the people who were able to take advantage of the program by having additional dollars towards a new car. In addition, Ford, Honda, and Toyota were the industry winners.

The losers are Chrysler, General Motors, the government, and the US taxpayers. The taxpayers are on the hook for bailing out GM and Chrysler and for funding a program that did nothing for the two companies that the taxpayers basically own. The other losers are those people who would have been willing to buy a used car but will see used car prices rising because of all the "clunkers" taken off the market reducing supply.

Well, Edmunds.com has done a study and here is what they found.  During the program, they show that a total of 690,000 cars were sold.  Their analysis suggests that the program may have added a total of 125,000 sales.  Based on the cost of the program, that works out to $24000 per car.  If you really stop to think about it, this makes perfect sense.  After all, a fair percentage of the cars sold would have sold regardless of the Cash-for-clunkers program.  It is logical, therefore, to calculate the cost per car on the incremental sales that the program generated.

Needless to say, the very thin skinned White House had to issue comments critical of the study. This drew another nice little press release on Edmonds defending their analysis. 
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