Edmunds.com has done the math on the Cash for Clunkers program, and the automotive Web site says the extra sales created by the program will cost taxpayers about $20,000 apiece.
Cash for Clunkers will drive about 250,000 trade-ins of vehicles worth $4,500 or less in a three-month period at a cost of $1 billion, but during a typical three-month period in the U.S., about 200,000 cars worth $4,500 or less are traded in anyway, according to the Web site. This means that Cash for Clunkers will effectively create only 50,000 additional trade-ins at a cost of $20,000 each to taxpayers.
“The incremental sales will be limited and at a considerable cost. In effect, we are paying consumers to do something most would do anyway,” said Jeremy Anwyl, Edmunds.com CEO. “So as a stimulus, the program fails.”
However, there is a slight silver lining to the program’s perceived inefficiencies, Anwyl says.
“The best consequence is that many consumers are getting interested in the idea of a new vehicle after hearing about Cash for Clunkers,” he said. “We have to hope that even if they don’t qualify, they will buy a vehicle anyway.”
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Visit www.cars.gov for more information about Cash for Clunkers.