Edmunds.com Responds to Latest White House "Cash for Clunkers" Analysis

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

Tue Apr 6, 2010 2:40pm EDT 

SANTA MONICA, Calif.--(Business Wire)--
Today, the White House unexpectedly presented its latest defense of last
summer`s "Cash for Clunkers" program. In the process, it took issue with
Edmunds.com, the premier online resource for automotive information, whose
analysis of the program was widely adopted and supported by independent
economists and media. 

"One has to wonder why the White House continues to feel the need to defend a
program that is no longer being debated," observed Edmunds.com CEO Jeremy Anwyl.
"Trying to add a spin to old news seems pointless when there are more pressing
issues for the government to address." 

The White House claims that car sales are much stronger thanks to the Cash for
Clunkers program. Edmunds.com offers the following counterpoints:

1
        The White House seems to have missed the simple point that car sales 
        were beginning to recover before the Cash for Clunkers program 
        was introduced. Even the program’s proponents would have to agree that 
        it was too little, too late.
      2
        A properly designed Keynesian stimulus is structured to stimulate the 
        market for 12 to 18 months, providing support while the economy 
        recovers. Cash for Clunkers created an unhealthy spike, distorting the 
        marketplace by suddenly generating about 125,000 
        incremental new car sales and pulling ahead hundreds of thousands 
        more.
      3
        Independent economists generally agree with Edmunds.com’s analysis of 
        the program. For example, on November 2, Freakonomics author 
        Steven Levitt blogged about the topic for nytimes.com 
        “Cash for Clunkers mostly just turned out to be a gift from the 
        government to people who happened to be in the market for a new car at 
        the right time…It is relatively easy to move around the timing of when 
        someone purchases a durable good, but much harder to affect whether 
        they buy a durable good or not.”
      4
        Relatively strong March car sales, which the government specifically 
        celebrates in its report, were artificially stimulated by remarkable 
        incentives programs initiated by Toyota in an attempt to deal with its 
        well-publicized woes. March sales were an aberration.
      5
        The government reports that in the months since Cash for Clunkers, the 
        average Seasonally Adjusted Annual Rate (SAAR) has been 10.7 million 
        car sales. However, if you eliminate data from December and March – 
        two months when consumers believed they could get unusually good deals 
        on new cars – the average SAAR drops to only 10.3 million. Today’s car 
        sales are still abysmally low by historical standards.

"This White House report conveniently avoids an accounting of the program's
costs. For example, new and used car prices were wildly inflated during the
program, which especially hurt the car-shoppers who didn`t have a qualifying
`clunker,`" noted Anwyl. "And what about the costs to the beleaguered taxpayer?"


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

Edmunds.com Inc. publishes four Web sites that empower, engage and educate
automotive consumers, enthusiasts and insiders. Edmunds.com, the premier online
resource for automotive information, launched in 1995 as the first automotive
information Web site. Its mobile site, accessible from any smartphone at
www.edmunds.com, makes car pricing and other research tools available for car
shoppers at dealerships and otherwise on the go. InsideLine.com is the most-read
automotive enthusiast Web site. Its mobile site, accessible from any smartphone
at www.insideline.com, features the wireless Web`s highest quality car photos
and videos. CarSpace is the most established automotive social networking Web
site. AutoObserver.com provides insightful automotive industry commentary and
analysis. Edmunds.com Inc. is headquartered in Santa Monica, California, and
maintains a satellite office in suburban Detroit. Follow Edmunds.com on Twitter
@edmunds and fan Edmunds.com on Facebook at http://www.facebook.com/edmunds.

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


Copyright Business Wire 2010
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