Cash For Clunkers Cost $24,000 for Each Additional Sale Generated

Edmunds.com has analyzed the "Cash for Clunkers" program. When you consider how many people would have bought a car anyway, the cost of each new sale stimulated was $24,000. This is about the same as giving away cars.

From CSM:

American taxpayers paid a lot of cash for those clunkers: $24,000 for each new car sold, according to a study released Wednesday.

...The firm says that number is about 125,000 cars. By that measure, the government spent $24,000 to generate each sale of a new car.

Cash for "Clunkers" Hangover

Cash for "clunkers" cost taxpayers almost $3 billion and caused a spurt in auto sales of mostly foreign vehicles. Most dealers are still waiting to get paid by the government. Meanwhile, showroom traffic has plummeted and dealers are worried.

Like many dealers across the country, the dealership in Ypsilanti Township, Mich., west of Detroit, is suffering from a Cash for Clunkers hangover, and Sales Manager Paul Grahl isn't sure when it will end....

"It was good while it lasted," said Phil Warren, sales manager at Toyota Direct in Columbus, Ohio. "Now we're a little bit concerned about what happens next. The program may have just taken a lot of people out of the market."

Dealers dumping "Cash for Clunkers" program

Many dealers are dropping out of the Cash for Clunkers" program in spite of significant increases in sales. The reason is they aren't getting paid. Only 2% of the money due under this program has been paid to dealers so far. Do you really want these people administering this program in charge of your health care?

AP reported via the NYP:

The Greater New York Automobile Dealers Association, which represents dealerships in the New York metro area, said about half its 425 members have left the program because they cannot afford to offer more rebates. They're also worried about getting repaid.

"(The government) needs to move the system forward and they need to start paying these dealers," said Mark Schienberg, the group's president. "This is a cash-dependent business."

The program offers up to $4,500 to shoppers who trade in vehicles getting 18 mpg or less for a more fuel-efficient car or truck. Dealers pay the rebates out of pocket, then must wait to be reimbursed by the government. But administrative snags and heavy paperwork have created a backlog of unpaid claims.

Schienberg said the group's dealers have been repaid for only about 2 percent of the clunkers deals they've made so far.

Many dealers have said they are worried they won't get repaid at all, while others have waited so long to get reimbursed they don't have the cash to fund any more rebates, Schienberg said.