Edmunds.com Responds to White House Comments on Cash for Clunkers Analysis

Thu Oct 29, 2009 3:42pm EDT

* Reuters is not responsible for the content in this press release.

SANTA MONICA, Calif.--(Business Wire)--
Today the Department of Transportation and White House chose to respond to an
analysis Edmunds.com released Wednesday that looked at auto sales this year and
what sales volumes would have been had the popular Cash for Clunkers program
never existed. 

At issue is one point of the analysis showing the taxpayer cost for every
incremental vehicle sold was $24,000. To be clear, Edmunds.com is not disputing
the government`s statements regarding total voucher applications, vehicles sold
or voucher values. The key question is how many of these sales would have
occurred anyway. 

Apparently, the $24,000 figure caught many by surprise. It shouldn`t have. The
truth is that consumer incentive programs are always hugely expensive when
calculated by incremental sales - always in the tens of thousands of dollars.
Cash for Clunkers was no exception. 

The White House claims that our analysis was based on car sales on Mars and that
on Earth, the marketplace is connected. We agree the marketplace is connected.
In fact, that is exactly the basis of our analysis. 

It is also claimed we missed the possibility that Cash for Clunkers generated
excitement and consumers bought vehicles even if they didn`t qualify for the
program -- a claim that has been widely supported by anecdote but by little
analysis. It does, after all, seem a bit odd that masses of consumers would
elect to buy a vehicle because of a program for which they don`t qualify --
doubly so when you add in the fact that prices shot up during Cash for Clunkers,
creating a disincentive to buy. 

Finally, the White House claims that the increase in fourth-quarter production
reported by the car manufacturers can be attributed to Cash for Clunkers. But
here is a better reason: the economy is recovering accompanied by improved car
sales. No manufacturer increases production -- a decision with long-term
consequences -- based on the 30-day sales blip triggered by an event like Cash
for Clunkers. 

With all respect to the White House, Edmunds.com thinks that instead of shooting
the messenger, government officials should take heart from the core message of
the analysis: the fundamentals of the auto marketplace are improving faster than
the current sales numbers suggest. 

Isn`t this a piece of good news we can all cheer? 

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 2007 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

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