Posted on 08/01/2009 8:17:19 AM PDT by PureSolace
New Delhi, Aug 1, 2009: Will cash for clunkers destroy second hand car market in the US? Many people are asking the question ever since the cash for clunkers program was introduced by the Federal government just a week ago.
Yesterday the Federal government put its stamp on extension of the program and the increased funding for people who wanted to get rid of their gas guzzling clunkers.
The US House gave its nod to the extension of the program and 2 billion dollars more in funding. This will give some hope to clunker owners who thought that they may not be able to benefit from the program.
But with the number of people rushing to get rid of their old cars, and go for new, and fuel efficient ones, experts are saying that it may kill second hand car market in the United States.
A local man turned in his Cadillac. It looked like a sharp car, and I had never seen dirt on it. He bought a Prius. I will wonder if his Cadillac ever gets back on the road contrary to the rules.
No, that used Tundra must become more expensive. “Clunkers” are not being resold, they are being destroyed and taken off the market. There will be fewer used cars available, increasing their costs.
Cash for clunkers is an example of the Broken Window Fallacy in action. It only makes sense if you assume that the benefit of removing “gas guzzlers” from the fleet outways the costs, an assumption that I do not share.
Used cars will go up in price as well as new cars. The federal government is doing to the car market the same thing it has done to healthcare costs and college tuition.
Actually, all the cars traded in on the cash for clunkers have to be destroyed. I’m ready to downsize (kids are now driving) and even thought about this program (about time I got some of my tax dollars back). Once I found out they destroy the cars traded in, I changed my mind. Why should my perfectly good 5 year old Expedition be trashed (not even sold for parts, just scrapped) when it still has many good years in it. Talk about wasteful!
However, when I want to sell it, I see the price going up, as the government is eliminating my competition for me!
1) People driving older cars, have lower insurance rates
....and most likely no monthly car payment.
2) Now they have an attractive carrot dangling in front of
...them with this possible $4500.00 prize.
3) If they had to drive older cars due to lack of money
...what makes them think they can afford higher insurance
....in addition to a new monthly car payment?
“Before we can create our Utopia we must continue to destroy America and it's wealth first.”
Next on the list the American Automobile.
As you noted, the whole Cash for Clunkers boondoggle is really a scheme to encourage consumers to get back in debt. No doubt the govt. and their friends in large banks are alarmed that many citizens have realized that paying thousands of dollars in interest to banks to have a new car is a bad idea.
For many consumers they'll end up paying some bank way more in interest than the $4500 they get from the government. And the return on investment from buying and financing a new car just to get slightly better mileage is negative for the consumer.
Some people already got caught in the middle. Traded in their car and then the rules changed the next day. Dealer called them and said they needed the $4,500 they gave them or they couldn’t keep the car. I wondered if the dealer had already destroyed their car.
Good point!!!
How many auto mechanics is this deal going to hurt?
What is going to happen to NAPA auto parts because of this program?
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Not likely. The “cash for clunkers” program ran throught a billion dollars in an eye-blink. It’s pretty clear that this program is unsustainable. There will be quality used cars available. Could be that they will command a higher-than-normal price for a while.
Very temporarily.
You don't think they can keep this thing up forever, do you?
Plus, this being the government, a lot of the people who buy a car based on the cash for clunkers rebate are not going to get the rebate. It's already happening.
This is going to be the biggest government snafu ever perpetrated. Leno and Letterman will be joking about it for years.
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