‘Clunkers’ critique draws fire from White House

The White House lashed out again Thursday at a media outlet, calling the automotive site Edmunds.com “wrong (again)” for saying that the “cash for clunkers” program cost too much money and had little lasting impact on car sales or the economy.

Jeremy Anwyl, chief executive officer of Edmunds.com, said he was “shocked” by the administration’s reaction and said it ignored his auto research firm’s other conclusion that the industry is recovering faster than analysts think.

“I think they’ve got their B team responding,” Mr. Anwyl said. “I know there are smart people at the White House, but I don’t think they’re blogging today. Why are they even messing with this? We’re talking about the White House.

“I feel like Joe the Plumber,” he said.

Edmunds.com said Wednesday that it cost taxpayers $24,000 to spur each car sale beyond what would have occurred anyway.

About 690,000 cars were sold under the hugely popular program, from late July to late August, at a cost of $3 billion. Congress agreed to increase funding based on the heavy response.

The initiative was designed to boost car sales and reduce emissions, as rebates of up to $4,500 were available to those buying more fuel-efficient vehicles.

No one argues that some portion of “cash for clunkers” buyers were already planning to buy a car at some point this year or next. Therefore, hundreds of thousands of Americans got stimulus checks from their fellow taxpayers for making routine purchases.

But analysts differ on how many car buyers fit in that category.

Edmunds.com estimates that only 125,000 cars, or 18 percent of the total sold during the program, can truly be tied to “cash for clunkers” incentives. The auto information site based its analysis on a study of factors such as actual sales and pre-existing sales forecasts. The analysis excluded luxury cars and other vehicles ineligible for the program.

Dividing $3 billion by 125,000 yields a cost of $24,000 for each sale the stimulus program fostered, according to Edmunds.com’s analysis.

The average transaction price for a new vehicle in August was $26,915, the firm said.

The White House fired back on its Web blog Thursday, noting that motor-vehicle output boosted economic growth by 1.7 percent in the third quarter.

“This is the latest of several critical ‘analyses’ of the ‘cash for clunkers’ program from Edmunds.com, which appear designed to grab headlines and get coverage on cable TV,” the administration said.

“This analysis ignores … reports from across the country that people were drawn into dealerships by the ‘cash for clunkers’ program and ended up buying cars even though their old car was not eligible for the program.”

The White House also argued that automakers are ramping up fourth-quarter production because the program depleted their inventories, and that other research firms, including IHS Global Insight, have reached different conclusions about the economic impact of the stimulus program.

Mr. Anwyl faulted the administration’s “anecdotal” evidence.

“There’s always that one consumer who came in and found they didn’t qualify but bought something anyway,” he said.

“Car companies are increasing production, but the fact of the matter is that the car business is recovering. No car company is going to increase production because of a little 30-day increase in sales,” he said.

The White House cited an analysis by IHS Global Insight predicting that the program would add 600,000 net auto sales this year.

An IHS Global Insight spokesman declined to comment on the dispute specifically. But an economic analysis released by the firm Thursday said the “clunkers” rebates were not the major factor in increased auto production, as the administration argues.

“Most of the [third-quarter] increase in vehicle output would have happened even without cash for clunkers,” wrote IHS Global Insight economist Nigel Gault.