Posted by
Always To The Right on Thursday, October 29, 2009 6:14:19 PM
The Cash for Clunkers program provided federal subsidies of up to $4500
for those car owners willing to buy a more fuel-efficient vehicle in
exchange for certain classes of gas guzzlers. In all, the C4C program
generated over 690,000 sales in the few weeks that it ran, with an
average subsidy of $4,348 per sale. How many of these, though, would
have bought a new car in the near future anyway? According to a new
study by Edmonds, an industry analyst, only 125,000 of these sales
would have not been made without C4C — which brings the subsidy to about $24,000 per actual successful incentive (via Snapped Shot)
In the end, almost all C4C did was steal sales from the new model
year. Dealers unloaded last year’s models, and their new inventory
will sit on the lots without the buyers they may have had otherwise.
The destruction of used cars will make it more difficult for
lower-income earners to buy vehicles, thanks to a shortage of about
700,000 in the national inventory. That will impact employment and
consumer spending indirectly, which will mean a drag on future GDP
growth.