I hate to feel vindicated by the recent report from Edmunds.com stating that the Cash for Clunkers program failed to live up to its economic promise, but my arguments that C4C was a very expensive way to “cut carbon” bears out in the market place.

Still, I’m disappointed to see the White House feebly defend what was so obviously a bad policy. And the recent talk about how wonderful it is that used car prices have risen is excellent for people who want to trade in cars, but terrible for those with low or fixed income.  The cars they could afford have now been destroyed as clunkers.  If you measure a program by the People, Planet, Profit yardstick, C4C fails miserably for everyone but the car companies.

Reproduced in its entirety is Edumund’s response the White House’s response to Edmund’s findings:

FOR IMMEDIATE RELEASE

Contact:
Jeannine Fallon/Chintan Talati
Edmunds.com Corporate Communications
www.Edmunds.com
Media Hotline: 310-309-4900
pr@edmunds.com

Edmunds.com Responds to White House Comments on Cash for Clunkers Analysis

SANTA MONICA, Calif. — October 29, 2009 — Today the Department of Transportation and White House chose to respond to an analysis Edmunds.com released Wednesday that looked at auto sales this year and what sales volumes would have been had the popular Cash for Clunkers program never existed.

At issue is one point of the analysis showing the taxpayer cost for every incremental vehicle sold was $24,000. To be clear, Edmunds.com is not disputing the government’s statements regarding total voucher applications, vehicles sold or voucher values. The key question is how many of these sales would have occurred anyway.

Apparently, the $24,000 figure caught many by surprise. It shouldn’t have. The truth is that consumer incentive programs are always hugely expensive when calculated by incremental sales — always in the tens of thousands of dollars. Cash for Clunkers was no exception.

The White House claims that our analysis was based on car sales on Mars and that on Earth, the marketplace is connected. We agree the marketplace is connected. In fact, that is exactly the basis of our analysis.

It is also claimed we missed the possibility that Cash for Clunkers generated excitement and consumers bought vehicles even if they didn’t qualify for the program — a claim that has been widely supported by anecdote but by little analysis. It does, after all, seem a bit odd that masses of consumers would elect to buy a vehicle because of a program for which they don’t qualify — doubly so when you add in the fact that prices shot up during Cash for Clunkers, creating a disincentive to buy.

Finally, the White House claims that the increase in fourth-quarter production reported by the car manufacturers can be attributed to Cash for Clunkers. But here is a better reason: the economy is recovering accompanied by improved car sales. No manufacturer increases production — a decision with long-term consequences — based on the 30-day sales blip triggered by an event like Cash for Clunkers.

With all respect to the White House, Edmunds.com thinks that instead of shooting the messenger, government officials should take heart from the core message of the analysis: the fundamentals of the auto marketplace are improving faster than the current sales numbers suggest.

Isn’t this a piece of good news we can all cheer?

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1. Cash for Clunkers or Expensive Irrelevance
2. Clunk It!
3. Tax Free Weekend
4. Stop Clunking Things!
5. Unaffordable Energy, Part I