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Cash-For-Clunkers Smackdown: White House Takes on Edmunds

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Creative Commons license by dcjohn

Creative Commons license by dcjohn

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When Edmunds.com released its report on the Cash-for-Clunkers program on Wednesday, saying it cost $24,000 for each vehicle that wouldn't otherwise have been sold, it must have expected pushback.

It may not have anticipated, however, a sharp retort from the highest office in the land: the White House. But that's what it got yesterday, via a pithy entry on the White House blog calling the Edmunds analysis "implausible" and "faulty".

It not only refuted Edmunds' contentions by citing a report from the Council of Economic Advisors, but accused Edmunds of releasing sensational Clunkers analyses solely to draw media attention.

The White House made two points: First, Clunkers credits drew additional shoppers to showrooms, some of whom bought cars even without rebates and, second, that the U.S. economy will benefit in the fourth quarter as automakers increase spending to rebuild depleted inventories.

A seemingly startled Edmunds promptly responded to the White House post, calling the first contention "a bit odd" and attributing manufacturers' Q4 production increases not to the Clunkers program but to slowly improving overall sales.

But the Edmunds rebuttal ends on a conciliatory note: "Instead of shooting the messenger, government officials should take heart [that] the auto marketplace [is] improving faster than current sales numbers suggest." In other words, "Can't we all just get along?"

Cash for Clunkers banner with Mercury Sable, Albany, New York

Cash for Clunkers banner with Mercury Sable, Albany, New York

Enlarge Photo

The original Edmunds.com analysis said about 125,000 of the 690,000 vehicles that replaced clunkers, or 18 percent, were truly incremental, i.e. they wouldn't have sold without incentives. Dividing the $3 billion program cost by that number gives an average cost of $24,000 per sale.

The Detroit News notes that Edmunds' percentage is far lower than estimates by the White House (64 to 81 percent), General Motors (72 percent), Moody's (60 percent), and Ford (20 to 30 percent).

The usually outspoken Mike Jackson, CEO of megadealer AutoNation, chimed in to back the White House, saying, "Edmunds' political views have tainted their usual rigorous approach to research."

The clunkers program, formally known as the Car Allowance Rebate System (CARS), brought together two somewhat contradictory goals when it was being debated this summer.

One goal was to encourage purchase of vehicles with far higher fuel efficiency, to cut gasoline use and reduce emissions. But as auto sales collapsed last fall, it came to be viewed as a way to stimulate the economy and keep the car industry from systemic collapse as well.

Once Cash-for-Clunkers went into action at the end of July, it proved hugely popular, needing emergency funding after just a single week to meet the demand.

The program took nearly three quarters of a million heavily-polluting cars and trucks off the roads, and put that many new, much cleaner vehicles in their place. And it boosted the ailing car industry, including suppliers and dealers that employ hundreds of thousands of workers.

As our Nelson Ireson noted yesterday, "Whether it was worth it may end up being answered in less measurable terms of saved jobs, factories and dealerships that would otherwise have been pushed past the breaking point with another month or two of dismal sales."

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Comments (16)
  1. Funny how everyone objecting to Edmunds numbers has a vested interest in showing that cash for clunkers was a success.
    Me thinks they protest too much.
     
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  2. I'm one that thinks that Edmunds is closer to the mark. History shows that the government can't manage money well and that whenever they set out a cost it always balloons way over its goal. They are terribly inefficient.
     
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  3. Mike Jackson of Auto Nation commenting on "political views"? Oh lord the irony of it all. This clown is constantly kissing azz and polishing terds just to win favor with the politicos. His business depends on them leaving him alone while he bilks customers and the .gov of cash.
    Remember his sucking up to the green car requirements when he was selling Prius's for 25% over MSRP? Remember his incessant whining for higher gas taxes when the market turned and he couldn't unload his overbloated inventory of small cars because no one wanted to buy one?
    Class "A" jerk.
     
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  4. I'm still patting myself on the back and telling my wife how proud of me she should be... You see, my income went up significanlty this quarter, heck, this year!
    I was wondering what I could do to supliment my salary which, due to the financial conditions of the times, is lower than it has been in years past. So it finally came to me in a fit of inspiration, I solved my problem and greatly increased my income for the year.
    I went to the bank (China Bank) and borrowed a bunch of money! It was actually a line of credit so it wasn't going to show up on my balance sheet unless I spent it, so like the genius that I am, I prompltly found dozens, perhaps hundreds, of things to spend money on that I didn't really need.
    So now, if you look at all my spending, you will clearly see that my income went up drastically!
    Unfortunately, I have a confession to make: I can't really take credit for this brilliant idea, I drew my inspiration from C4C!
     
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  5. To: lesBaer45. I am not sure how or why you have the detailed insight into the dealings of Mike Jackson, however, I have seen him many times on Squawk Box. You could not have been more precise in your analysis. Everytime I see him he is bending over to kiss the administrations butt and back everyone of their policies, class "A" jerk is more than kind.
     
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  6. Hindsight is 20/20 at the time Cash for Clunkers seemed like a great idea and it certainly got showrooms humming. You didn't hear Edmunds or the dealerships complaining while they were on the winning side of the cash for clunkers equation.
     
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  7. implausibly faulty! your maths are no good in the spatio-temporal region known as the Beltway! Division and multiplication only work when handling people, not money! exclamation point!
     
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  8. Numbers don't lie but liars use numbers. BTW, how did this turn into a slamming of Mike Jackson-way to defelct the attention away from Edmunds!
     
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  9. From the article - "The Detroit News notes that Edmunds' percentage is far lower than estimates by the White House (64 to 81 percent), General Motors (72 percent), Moody's (60 percent), and Ford (20 to 30 percent)."
    All of the above are politically biased. I saw an executive from Moody's a couple of days ago saying that the first-time home-buyer's plan should be extended and the amount doubled to $18,000 per buyer. Moody's is one of the companies responsible for stamping AAA ratings on bad debt bundles and swindling investors.
    It's obvious that Edmunds is the realiable source in this bunch.
     
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  10. Hah, remarkable how all the whiners, moaners, anti-govt this or thats, float to the bottom at comments to bitch about how awful it all is, how the gub'ment is gonna tax us all out of existence, waste our money, steal our men, impregnate our women (or is it the other way round?), and generally screw us all over.
    Of course, don't take any of MY entitlements! Take 'em from that OTHER guy over there! Don't touch my social security! Leave my mortgage tax break alone! I don't wanna pay! Make the others pay! Mine, mine, mine! Waaaaaaaaaaaaaah!
    Puh-leeze. If I saw any actual constructive suggestions in ANY of these comments, I'd give some of you a bit of respect. But, christ, my 3-year-old behaves better than you lot. Ptui.
     
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  11. Edmunds' response to the White House response seemed really hollow. Why don't they go after their numbers or methodology? I'm smelling political motovations every whichway, so this is just waiting for one of the neutral fact-check groups to take over.
     
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  12. a few thoughts on this. First of all if media attention is all edmunds wanted then did the white house think that by posting a blog post they would be hurting Edmunds?? while my guess is that Edmunds is far closer to the right number it is interesting that they didnt protest while it was going on!!!
     
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  13. others have already said it well, so the White House and the b#tt smooching CEO of AutoNation are not political. It astounds me the arrogance of the left. I think they believe if they say something enough times---ITS TRUE.---IDIOTS
     
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  14. Re: Knocking Macchi
    Are you not concerned with a $1.75 trillion budget deficit, the rapidly declining dollar, and estimated 2009 debt-to-GDP (Gross Domestic Product) ratio of 90%? Not counted: Healthcare and Cap & Trade bills coming down the pike.
    How are we to pay for this, along with the unfunded Medicare & Medicaid and Social Security? Reasonable concerns and outrage, not over-the-top fear mongering!
     
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  15. Notice a pattern of petty reactions of this WH. Just like yesterday when the AP reported fuzzy math findings after investigating the stimulus jobs report posted on the WH website.
     
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  16. Cash for clunkers was a disaster for taxpayers, the poor, car repair shops and car donation.
     
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