“Cash For Clunkers” : Incremental Sales Analysis

My last post about “Cash For Clunkers” was on October 8 and can be found here:

https://www.economicgreenfield.com/2009/10/08/cash-for-clunkers-revisited/

On Thursday, there was an interesting story on CNNMoney.com concerning a sales analysis of the Cash For Clunkers program.  It can be found at this link:

http://money.cnn.com/2009/10/28/autos/clunkers_analysis/?postversion=2009102910

Here are some excerpts that are particularly notable:

“A total of 690,000 new vehicles were sold under the Cash for Clunkers program last summer, but only 125,000 of those were vehicles that would not have been sold anyway, according to an analysis released Wednesday by the automotive Web site Edmunds.com.”

and later in the article:

“The average rebate was $4,000. But the overwhelming majority of sales would have taken place anyway at some time in the last half of 2009, according to Edmunds.com. That means the government ended up spending about $24,000 each for those 125,000 additional vehicle sales.”

and later in the article:

“In order to determine whether these sales would have happened anyway, Edmunds.com analysts looked at sales of luxury cars and other vehicles not included under the Clunkers program.

Using traditional relationships between sales volumes of those vehicles and the types of vehicles sold under Cash for Clunkers, Edmunds.com projected what sales would normally have been during the Cash for Clunkers period and in the weeks after.

Edmunds.com‘s estimate of the ultimate sales increase generally matches what industry experts had thought, said George Pipas, a sales analyst with Ford Motor Co (F, Fortune 500).”

SPX at 1036.19 as this post is written