Thread: CARS cost taxpayers $24k per car.

http://money.cnn.com/2009/10/28/auto...ysis/index.htm

NEW YORK (CNNMoney.com) -- A total of 690,000 new vehicles were sold under the Cash for Clunkers program last summer, but only 125,000 of those were vehicles that would not have been sold anyway, according to an analysis released Wednesday by the automotive Web site Edmunds.com.

Still, auto sales contributed heavily to the economy's expansion in the third quarter, adding 1.7 percentage points to the nation's gross domestic product growth.

Is the economy really getting better?
The Cash for Clunkers program gave car buyers rebates of up to $4,500 if they traded in less fuel-efficient vehicles for new vehicles that met certain fuel economy requirements. A total of $3 billion was allotted for those rebates.

The average rebate was $4,000. But the overwhelming majority of sales would have taken place anyway at some time in the last half of 2009, according to Edmunds.com. That means the government ended up spending about $24,000 each for those 125,000 additional vehicle sales.

"It is unfortunate that Edmunds.com has had nothing but negative things to say about a wildly successful program that sold nearly 250,000 cars in its first four days alone," said Bill Adams, spokesman for the Department of Transportation. "There can be no doubt that CARS drummed up more business for car dealers at a time when they needed help the most."

In order to determine whether these sales would have happened anyway, Edmunds.com analysts looked at sales of luxury cars and other vehicles not included under the Clunkers program.

Using traditional relationships between sales volumes of those vehicles and the types of vehicles sold under Cash for Clunkers, Edmunds.com projected what sales would normally have been during the Cash for Clunkers period and in the weeks after.

Edmunds.com's estimate of the ultimate sales increase generally matches what industry experts had thought, said George Pipas, a sales analyst with Ford Motor Co (F, Fortune 500). But that misses the point, he said.

"The whole purpose of the program was to provide some kind of catalyst to kick-start the economy," he said, "and by all accounts the extra production that was added this year was a boost to the economy."

0:00 /4:57Why I fired GM's CEO
Ford was one of the biggest proponents of the Cash for Clunkers program and several Ford models were among the top sellers under the program.

While auto sales in September were hurt because auto dealership inventories were drained of products by the program, sales this month are already back on track or better, Pipas said. "I think the October sales results will show Clunkers is behind us and there's no more payback or inventories issues."

Emunds.com's projection indicates that, without Cash for Clunkers, October's sales increase would be even higher.

Interesting article.

I saw that article ....... sounds just like the govt to Me ! Just like our 3.5% growth was not from people buying stuff it was the Govt Spending ! These same people are going to Run Our Healthcare ?? All I say is ya'll need your Heads Examined !

Bah. Projections.

And based on sales trends of luxury cars? Shooting from the hip that just sounds wildly off base.

Also this little gem made me chuckle:

While auto sales in September were hurt because auto dealership inventories were drained of products by the program,

I just find it laughable that sales were hurt by depleted inventories, caused by sales.

I'm curious of the longer term effects of this. How many people went out and got auto loans that they most likely can't withstand the payments for? It'll be like a miniature housing fallout again

Kinda like, you wouldn't buy a 52" TV because it's expensive and you don't have enough disposable income to purchase it.....however, take off a few hundred dollars from a sale promo, and you may take out your credit card (although you still don't have sufficient disposable income) and buy it, because of the deal you are getting.

Simplistic view....probably.....but I think it holds some merit to the situation.

The really funny part is that we borrowed that money to give away to keep car companies we had just bailed out with more borrowed money afloat.
Sounds like a scam to me.
But if the study is accurate it would lead one to believe that when ham-handed federal bureaucrats tinker with the market the results are rarely positive in the long term( Sub-prime market).