Of the 690,000 new vehicles sold under the Cash-for-Clunkers program last summer, 565,000 were vehicles that would have otherwise been sold regardless of the program, Edmunds said in an analysis of the program released on Wednesday. Auto sales did contribute heavily however, to the expansion of the economy, as CNN reports that they added 1.7 percentage points to the country’s GDP.
“The average rebate was $4,000. But the overwhelming majority of sales would have taken place anyway at some time in the last half of 2009, according to Edmunds.com. That means the government ended up spending about $24,000 each for those 125,000 additional vehicle sales.” the CNN report said.
Edmunds used an index based on sales of cars not included in the Clunkers program, and using traditional relationships between sales of those cars and the ones covered by the government program, they hypothesized on what sales would have been without the program offered when it was.
George Pipas, a sales analyst with FoMoCo said that the Edmunds estimates were right in line with what industry experts had thought, but still thinks Edmunds is too harsh on the program. “The whole purpose of the program was to provide some kind of catalyst to kick-start the economy,” he told CNN, “and by all accounts the extra production that was added this year was a boost to the economy.”.
– By: Stephen Calogera
Source: CNN Money