Yesterday we detailed Government Fail: Housing (i.e. a $45k cost to taxpayers per marginal home sale). Today, we visit the automobile industry. Calculated Risk, backs into the cost per automobile sale that would otherwise would not have occurred:
First, for autos, if sales in August had been about the same as June (pre-tax credit), there would have been 850 thousand light vehicles sold (NSA). This is about a 9.7 million SAAR.$7200 per auto. That's some chunk of change to pay for a car that may in many occasion been in running condition, BUT it likely helped American auto manufacturers... right? Well, maybe. BUT, not NEARLY as much as it apparently helped Foreign manufacturers.
Next we add in the tax credit: Although the DOT reported close to 700 thousand car sales associated with the Cash-for-Clunkers program, probably about 550 thousand were in August. If these were all additional sales, then the total sales (NSA) for August would be about 1.4 million, or almost 16 million SAAR.
If Edmonds.com is correct, and total sales were 1.17 million (NSA) in August, then the tax credit only generated about 320 thousand extra sales. Of course some regular car buyers might have put off a purchase to avoid the rush in August, so this isn't perfect, but instead of costing taxpayers $4,170 per car (as announced by DOT), the cost to taxpayers per additional car sold was close to $7,200.
Year over Year Change in Auto Sales