Sunday, September 20, 2009

"Cash for Clunkers" in review. 

The results are in.

Donald Marron points us to a Council of Economic Advisers study (.pdf) on the outcome of the Cash For Clunkers program.

The gist: There were 690,000 "clunker" sales, of which 360,000 would have happened anyway between June and December of this year, so the program increased net sales for 2009 by 300,000.

As the program cost taxpayers $2.88 billion, each of the 330,000 additional auto sales cost taxpayers about $8,727.

That's not counting the loss to society of the turned in vehicles that were destroyed in spite of having positive market value. This is a genuine cost too (as explained in a prior post detailing who gained and lost how much through clunker sales).

The maximum trade-in value of a "clunker" was $4,500. If we guestimate their average value at $2,250, that's another $1.55 billion of cost -- $4.43 billion total, $13,324 per additional sale. Not cheap!

How did the Big Three Detroit car makers make out?

From a separate report....
The real winners can best be described by a listing of the August sales leaders:

1. Toyota Camry - 54,396
2. Ford F Series - 45,590
3. Honda Civic - 43,294
4. Toyota Corolla/Matrix - 43,061
5. Honda Accord - 39,726
6. Chevrolet Silverado - 32,421
7. Honda CR-V - 30,284
8. Nissan Altima - 26,833
9. Ford Focus - 25,547
10. Hyundai Elantra - 21,673

The program was designed to aid U.S. carmakers -ó principally General Motors and Chrysler who were emerging from bankruptcy protection.

There is not one GM or Chrysler in the passenger car category listed. (There is one GM truck.)

Another gauge of the Cash for Clunkers programís success is the percent of market share recorded by the members of the Detroit Three.

Automotive News reports: "GM lost a monstrous 5.0 points of market share compared with August 2008, and Chrysler Group was down 1.4 points. GMís share was an anemic 19.4 percent; Chryslerís was 7.4 percent"...

So, our federal government, which owns 60 percent of GM, managed to fund hundreds of millions of dollars to GMís competitors.

In a similar scenario, imagine Ford Motor Co.ís stockholders giving $4,500 for clunker trade-ins on competitorsí cars.

I donít think so.

Our politicians are crowing about Cash for Clunkers being "the most successful stimulus ever".

You be the judge.