Cash for Clunkers clearly distorted the U.S. economic figures in an unsustainable way, according to The Business Insider, which cites a report from the Bureau of Economic Analysis that indicates GDP growth in the third quarter would have been 1.89 percent, not 3.5 percent as claimed, without government money.
Moreover, the $3 billion program cost an average of $24,000 per additional car sold, according to an analysis by automotive consumer researcher Edmunds.com.
Nearly 690,000 vehicles were sold during the 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.
"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.”
Ironically, Anwyl notes, the average transaction price for a new vehicle in August 2009 was only $26,915 minus an average cash rebate of $1,667.
For $3 billion, “the federal government could have purchased the 125,000 cars outright at manufacturer suggested retail prices … and then handed each of the recipients an additional bonus check averaging the Cash-for-Clunkers subsidy of $4,000,” writes Thomas Eddlem at The New American.
“Or they could have bought every one of those 125,000 people a Smart car and then given them a check for $6,000.”
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