Buy a car
from the safety of your home.
Connect with our dealer and finance partners through our site and ask for details regarding their at-home car buying services.
  • Video car tours
  • E-transaction: complete paperwork online
  • Vehicle home delivery
  • Enhanced vehicle sanitization

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

October 30, 2009

When 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

The original 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."

The Car Connection
See the winners »
The Car Connection
Commenting is closed for this article
Ratings and Reviews
Rate and review your car for The Car Connection
Review your car
The Car Connection Daily Headlines
I agree to receive emails from The Car Connection. I understand that I can unsubscribe at any time. Privacy Policy.
Thank you! Please check your email for confirmation.