By David Shepardson
Detroit News Washington Bureau

(October 2009) Washington — The White House said the influential automotive news Web site Edmunds.com's harsh analysis of the impact of "cash for clunkers" was "faulty" and "implausible." Edmunds shot back that the White House was "shooting the messenger."

Edmunds said cash for clunkers cost taxpayers $24,000 per vehicle sold. Nearly 690,000 vehicles were sold during the $3 billion cash for clunkers program, officially known as CARS, but Edmunds.com analysts calculated that only 125,000 of the sales occurred as a result of the program.

Edmunds.com's "faulty analysis suggesting that the cash for clunkers program had no meaningful impact on our economy or on overall auto sales. This is the latest of several critical 'analyses' of the cash for clunkers program from Edmunds.com, which appear designed to grab headlines and get coverage on cable TV," the White House said on its blog Thursday afternoon. "Like many of their previous attempts, this latest claim doesn't withstand even basic scrutiny."

The White House said Edmunds based its analysis on the "implausible" assumption that "the market for cars that didn't qualify for cash for clunkers was completely unaffected by this program. In other words, all the other cars were being sold on Mars, while the rest of the country was caught up in the excitement of the cash for clunkers program."

The White House also said Edmunds didn't account for the "beneficial impact" the program will have on fourth-quarter Gross National Product because automakers have ramped up their production to rebuild their depleted inventories.

"Most importantly, this program is helping boost our economy and create jobs now when we need it most. In a comprehensive report, the Council of Economic Advisers estimated that cash for clunkers will create 70,000 jobs in the second half of 2009," the White House said. "Edmunds.com, on the other hand, is promoting a bombastic press release without any public access to their underlying analysis."

Edmunds stands by its analysis.

"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," they wrote.

The central issue, Edmunds said, "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."

Edmunds rejected the White House suggestion that people got caught up in the excitement of the program and bought cars, even if they didn't qualify. Edmunds said that's "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."

And Edmunds rejected the notion that automakers boosted production solely because of the program.

"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," Edmunds wrote.