'Cash for clunkers' roars to life, amidst allegations of waste

Update: The "Cash for Clunkers" program was suspended late today when the Federal government feared the program would run out of money within days.

Ford Motors says the just-launched federal "cash for clunkers" program, launched this week, is already revving auto sales. At a press conference, Ken Czubay, Ford's U.S. sales and marketing chief, called the program "a huge success." Ford says new-car purchases jumped in July, thanks in part to "cash for clunkers," and for the first time this year, are on track to eclipse an annual threshold of 10 million. U.S. automakers even feel the government should pour more money into the program. According to Autoblog, dealers have already requested $95 million in reimbursement money from Uncle Same.

Not so fast, say some industry experts. According to auto-ratings and research firm Edmunds, the program is an expensive, inefficient way to stimulate the economy and reduce dependence on foreign oil. Car buyers trade in 200,000 vehicles worth less than $4,500 every quarter on average, according to Edmunds; the program's $1 billion budget will fund at most 250,000 trade-ins during that timeframe. This represents a real gain of only 50,000 vehicles and a cost to taxpayers of roughly $20,000 per extra sale. "We are paying consumers to do something most would do anyway," says Jeremy Anwyl, CEO of Edmunds.com.