More Cash for Clunkers Math

http://www.futureofcapitalism.com/2009/08/more-cash-for-clunkers-math

In our original analysis of the federal "Cash for Clunkers" program, we wrote, "We're assuming that the customer wouldn't have traded in the Trans Am at some point in the next ten years even without a subsidy, which is probably a flawed assumption that in any case only strengthens the case against the government subsidy." The CEO of Edmunds.com, Jeremy Anwyl, has an article in today's Wall Street Journal reporting that "in any given month 60,000 to 70,000 'clunker-like' deals happen with no government program in place. The 200,000-plus deals the government was originally prepared to fund through the program's Nov. 1 end date were about the 'natural' clunker trade-in rate." If these deals were going to happen anyway, why subsidize them?

by Editor  |  Aug 3, 2009 at 5:01 am Related Topics:  Auto Industry receive the latest by email: subscribe to the free futureofcapitalism.com mailing list