The Inconvenient Truth about "Cash for Clunkers": Each Car Sale to Cost Taxpayers $20k Apiece, Reports Edmunds.com

SANTA MONICA, Calif.--(Business Wire)--
Much has been written - both pro and con - about the Cash for Clunkers program
that officially launches today. Complexity, limited eligibility and minimal
funding are common criticisms. But so far, the chief failing has been
overlooked. Edmunds.com, the premier online resource for automotive information,
has determined that even if Cash for Clunkers reaches its budgeted cap, the
program will only help drive about 50,000 incremental new car sales, so each one
will cost taxpayers a whopping $20,000.

How is this possible? Edmunds.com`s research shows that typically 200,000
vehicles worth less than $4,500 are traded in for new vehicles every three
months. At best the current Cash for Clunkers program will fund 250,000 such
transactions in the same time period-a gain of only 50,000 vehicles. Given that
this program is budgeted to cost $1,000,000,000, this increase will come at the
cost of $20,000 per extra sale.

"The incremental sales will be limited and at a considerable cost. In effect, we
are paying consumers to do something most would do anyway," said Jeremy Anwyl,
CEO of Edmunds.com. "So as a stimulus, the program fails. One could make a
slightly stronger argument about the environmental benefits, but even there, the
program could have been better designed."

"Really, the best consequence is that many consumers are getting interested in
the idea of a new vehicle after hearing about Cash for Clunkers; we have to hope
that even if they don`t qualify, they will buy a vehicle anyway," Anwyl told
Edmunds` AutoObserver.com. "But, how long-lived will that be? Once the program
reaches its cap, interest will die down, and sales volume will fall as quickly
as it rose. What will motivate shoppers to brave the marketplace in the months
following Cash for Clunkers?"

Automakers must step up to continue the momentum. Anwyl points to the current
Chrysler incentive program as an example of a creative marketing message that
uses the Cash for Clunkers buzz to generate sales and to arm Chrysler dealers
with a useful tool when working with Cash for Clunkers "rejects."

For more information on Cash for Clunkers, please visit
http://www.edmunds.com/cash-for-clunkers/. Lively discussions about Cash for
Clunkers are talking place on Edmunds` CarSpace.com message boards at
http://townhall-talk.edmunds.com/direct/view/.f1db290.

About Edmunds Inc. (http://www.edmunds.com/help/about/)

Edmunds Inc. publishes four Web sites that empower, engage and educate
automotive consumers, enthusiasts and insiders. Edmunds.com, the premier online
resource for automotive consumer information, launched in 1995 as the first
automotive information Web site. Its most popular feature, the Edmunds.com True
Market Value®, is relied upon by millions of people seeking current transaction
prices for new and used vehicles. Edmunds.com was named "Best Car Research Site"
by Forbes ASAP, has been selected by consumers as the "Most Useful Web Site"
according to every J.D. Power and Associates New Autoshopper.com Study(SM), was
ranked first in the Survey of Car-Shopping Web Sites by The Wall Street Journal
and was rated "#1" in Keynote's study of third-party automotive Web sites.
Inside Line launched in 2005 and is the most-read automotive enthusiast Web
site. CarSpace launched in 2006 and is an automotive social networking Web site
and home to the oldest and most established automotive community.
AutoObserver.com launched in 2008 and provides insightful automotive industry
commentary and analysis. Edmunds Inc. is headquartered in Santa Monica,
California, and maintains a satellite office in suburban Detroit.

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

Copyright Business Wire 2009