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Edmunds casts doubt over the actual effectiveness of Cash for Clunkers; White House fires back

A new Edmunds research study indicates U.S. taxpayers paid $24,000 per new car sold during the Cash for Clunkers program which took place over the summer.

The entire Cash for Clunkers program cost a total of $3 billion, offering car owners with gas guzzlers to purchase a new car with up to $4,500 in monetary incentives.  The program -- aimed at boosting the economy and getting older, less fuel-efficient cars off the road -- didn't have the economical impact as expected by some numbers, states Edmunds.

According to Edmunds, “Nearly 690,000 vehicles were sold during the Cash for Clunkers 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.”

"Our research indicates that without the Cash for Clunkers program, many customers would not have traded in an old vehicle when making a new purchase," added Edmunds.com Senior Analyst David Tompkins.

If true, the $24,000 per vehicle paid by taxpayers is $3,000 less than the average cost of a new vehicle purchased during the program in August 2009: $26,915.

Statements from Edmunds have angered White House officials, with Edmunds defending itself by saying the government is "shooting the messenger."

The "faulty analysis suggesting that the cash for clunkers program had no meaningful impact on our economy or on on overall auto sales.  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," according to the White House.  "Like many of their previous attempts, this latest claim doesn't withstand even basic scrutiny."

The White House claims Edmunds didn't take "beneficial impact" from fourth-quarter Gross National Product into consideration when compiling its report.  Furthermore, the government said its program helped boost both local and the national economy, creating new jobs that were being pulled away from the U.S.

After the program ended, the auto industry suffered a post-clunker sales drop, though sales are slowly expected to rise.





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