A report conducted by the automotive information firm Edmunds.com found that of the nearly 690,000 vehicles sold under the program, only 125,000 of the sales were incremental.
Thursday, October 29, 2009
The White House fired back Thursday to a report that claimed taxpayers paid $24,000 per vehicle sold under the government's "Cash for Clunkers" auto program, calling the study a "faulty" analysis that "doesn't withstand even basic scrutiny."
In a blog posted to the White House Web site, White House director of new media Macon Phillips disputed a report by the automotive information firm Edmunds.com, which raised questions on the overall effectiveness of the government plan.
"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," wrote Phillips. "Like many of their previous attempts, this latest claim doesn’t withstand even basic scrutiny."
"Edmunds also ignores the beneficial impact that the program will have on 4th Quarter GDP because automakers have ramped up their production to rebuild their depleted inventories," he wrote.
The Edmunds report found that of the nearly 690,000 vehicles sold under the program, only 125,000 of the sales could be credited directly to the Cash-for-Clunkers program.
The rest of the sales would have happened anyway, despite the government program, the report said -- raising questions over its effectiveness.
The report also said that the average cost for a vehicle in August 2009 was only $26,915 -- minus an average cash rebate of $1,667.
Cash for Clunkers -- officially known as the Car Allowance Rebate System -- was a $3 billion program intended to provide economic incentives to Americans to purchase a new, more fuel efficient cars when they traded in an older, less efficient vehicle.
The program was touted for giving a boost to auto sales while increasing the sales of more fuel-efficient vehicles.
Edmunds.com was quick to respond to the White House's criticisms, saying, "instead of shooting the messenger, government officials should take heart from the core message of the analysis: the fundamentals of the auto marketplace are improving faster than the current sales numbers suggest."
"Apparently, the $24,000 figure caught many by surprise. It shouldn’t have. The truth is that consumer incentive programs are always hugely expensive when calculated by incremental sales -- always in the tens of thousands of dollars. Cash for Clunkers was no exception," the firm said in a press release Thursday. "The White House claims that our analysis was based on car sales on Mars and that on Earth, the marketplace is connected. We agree the marketplace is connected. In fact, that is exactly the basis of our analysis."