What’s that you say? You only got $4,500 at the dealer? True, but the government bureaucracy in Washington added another $20,000 per car to the cost:
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.
Still, auto sales contributed heavily to the economy’s expansion in the third quarter, adding 1.7 percentage points to the nation’s gross domestic product growth.
The Cash for Clunkers program gave car buyers rebates of up to $4,500 if they traded in less fuel-efficient vehicles for new vehicles that met certain fuel economy requirements. A total of $3 billion was allotted for those rebates.
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.
Since the program has ended, the auto market has collapsed…as predicted. Ramping up demand in the summer ensured that there would be little or no demand later in the year after the program ended.
Go look at the area car dealerships, you won’t find much inventory on hand. Not because they’re selling so fast, but because the dealers can’t afford the costs of keeping cars around that aren’t selling right now.