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Automotive Consumer
AUTOS: Obama Official Faults Clunkers Analysis
Edmunds.com analysts reported that the federal CARS program was excessively costly with minimal results.
Bob Golfen  |  Posted October 30, 2009   Washington, D.C.
Cash for Clunkers helped boost auto sales over last summer, but analysts say the cost was high. (Photo: Getty Images)
A White House official has lashed back at criticism of the Cash for Clunkers program from Edmunds.com analysts, who claim that the program ended up being overly costly and ineffective.

“This is the latest of several critical ‘analyses’ of the Cash for Clunkers program from Edmunds.com, which appear designed to grab headlines and get coverage on cable TV,” Macon Phillips, the Obama administration’s director of new media, said on the White House blog. “Like many of their previous attempts, this latest claim doesn’t withstand even basic scrutiny.”

Edmunds said in a media release Thursday that the overall cost to taxpayers for the rebate program averaged $24,000 per vehicle, if sales that would have happened anyway are taken into consideration.

“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 researchers said. “The rest of the sales would have happened anyway, regardless of the existence of the program.”

The Cash for Clunkers program, which ended in August, provided vouchers of $3,500 or $4,500 for gas-guzzling trade-ins by buyers of new cars or trucks. The program proved more popular than initially expected, and $3 billion was eventually given out in rebates at an average of $4,000 per vehicle.

Edmunds.com’s analysts divided $3 billion by 125,000 vehicles to arrive at the average $24,000 per vehicle.

“This analysis is valuable for two reasons,” said 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.”

Philips countered that the CARS program had a broadly positive effect on the automotive market, that automakers have boosted production as a result and Edmunds.com analysts had made faulty assumptions about the percentage of car deals that were consummated directly because of the program.

“On the same day that we found out that motor vehicle output added 1.7 percent to economic growth in the third quarter – the largest contribution to quarterly growth in over a decade – Edmunds.com has released a faulty analysis suggesting that the Cash for Clunkers program had no meaningful impact on our economy or on overall auto sales,” Phillips wrote in the blog.

In its media release, Edmunds explained how the research was conducted.

“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 (Seasonally Adjusted Annualized Rate) to make informed estimates,” Edmunds said. “These estimates were independently verified through careful examination of sales patterns reflected by transaction data.”

Bob Golfen, Automotive Editor for SPEEDtv.com, is a veteran auto writer based in Phoenix, Arizona, who has driven and evaluated essentially every new vehicle sold in the United States. A lifelong car enthusiast with a passion for collector cars, car culture and the automotive lifestyle, he annually attends and writes about Arizona's famous January collector-car auctions, focusing on Scottsdale’s monumental Barrett-Jackson Collector Car Event. SPEEDtv.com fans email veteran Automotive Editor Bob Golfen at

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