Wednesday, November 11, 2009

Cash for Clunkers Efficiency Impact Comes into Question

On August 25 the U.S. Department of Transportation wrapped up its Cash for Clunkers automobile rebate program, declaring it "wildly successful" (we put a link to the press release in our August 27 blog post). The program's reported statistics indicated that the average improvement in fuel economy was about 9 miles per gallon. The stats page also states, "Cars purchased under the program are, on average, 19% above the average fuel economy of all new cars currently available, and 59% above the average fuel economy of cars that were traded in."

These glowing wrap-up results contrast with an Associated Press analysis of new federal data. According to this analysis, as described in the Boston Globe article, the vehicle traded in most often in the Cash for Clunkers program was the Ford F-150 pickup, and owners of the vehicles "were 17 times more likely to buy a new F-150 than, say, a Toyota Prius." The fuel economy for these new F-150s ranged from 15 to 17 miles per gallon, leading to an improvement of just 1 to 3 miles per gallon over their "clunker" predecessors.

So was Cash for Clunkers "wildly successful" in terms of energy efficiency, the overall economy, or for the auto industry? An analysis claims that Cash for Clunkers cost taxpayers $24,000 per vehicle sold (read the press release). The Globe article says that the National Highway Traffic Safety Administration is still reviewing the AP's analysis.

Want more resources about economic stimulus programs? Take a look at our guide.

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