Cash For Clunkers, Classic Gov't. Folly

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From Jeff Jacoby

The price of "pre-owned" vehicles has climbed considerably over the past year. According to Edmunds.com, a website for car-buyers, a 3-year-old automobile today will set you back, on average, close to $20,000 -- a spike of more than 10 percent since last summer. For some popular models, the increase has been much steeper. In July, a used Cadillac Escalade was going for around $35,000, or nearly 36 percent over last July's price.
Why are used-car prices rocketing? Part of the answer is that demand is up: With unemployment high and the economy uncertain, some car-buyers who might otherwise be looking for a new truck or SUV are instead shopping for a used vehicle as a way to save money.

But an even bigger part of the answer is that the supply of used cars is far lower than it would be if your Uncle Sam hadn't decided last year to destroy hundreds of thousands of perfectly good automobiles as part of its hare-brained Car Allowance Rebate System -- or, as most of us called it, Cash for Clunkers. That was the program under which the government paid consumers up to $4,500 when they traded in an old car and bought a new one with better gas mileage. The traded-in cars -- which had to be in drivable condition to qualify for the rebate -- were then demolished: Dealers were required to chemically wreck each car's engine, and send the car to be crushed or shredded...
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Cash for Clunkers is a classic govt folly where unintended consequences arose from a program intended to help a particular group. If you all remember, local and national news quickly picked up the story and showed videos of people in car dealerships and testimonies of people who were going to benefit from the program (car dealerships, individuals wanting a new car, and even the auto unions.) But they never imagined the people who would be hurt by the program. Today, the price of used cars has risen and people who don't have the resources to buy a brand new car are suffering. Perfectly drivable cars were destroyed and new cars were made. (I imagine the carbon emissions used to create a new car and end the life of an old car is greater than the mpg saved with a new car). Overall this shows a lapse in judgement for the current administration.

Edit - I misused the phrase "lapse in judgement" as it implies a deviation from what is normally good judgement and is therefore not applicable to the present admin.
 
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Used cars also becoming more expensive because fewer people buy new cars now and dealerships have to pick up that extra cash somewhere so they increase used car sales. Alot of people hang onto their cars longer and even more people cant even afford a new one so dealerships wont deal much on used trade ins like they used to.

My neighbor had a pristine, beautiful acura with all the trimmings and dealership went like 1,200 below bluebook on it and didnt act like they wanted it much. That happened to him at a few places he went to when he got a honda crv recently.

I dont blame that cash for clunkers program alone on this, yeah might have been part of problem but it wasnt the biggest part of it. The biggest problem is people cant afford shit anymore, so the less cars they buy the less dealerships make, the decrease in sales means they have to raise prices in order to turn their normal profit. That whole program didnt last very long and most dealerships around here ran out their quote quickly, so it wasnt like the entire thing rang for a couple years non stop.
 
A lot of dealers actually sell significant amounts of new cars at breakeven and then make their actual profit from the sale of extended warranties, service contracts and accessories. The typical "quick lube" you see at most dealerships is often the most profitable operation of the dealership. The actual sale of cars is just how they attempt to build a client base for their service and parts operations.

The automakers themselves make as little as $250 per car, depending on the model, so yes building autos is a very expensive venture.
 
Yeah, can't simply blame a misguided govt program for this one.

The most profitable sector of car sales over the last 15 years (luxury SUVs) is basically gone now and it's going to be a while before the next substitute shows up. Until then the car market is going to be pretty bland and go nowhere. Well, until the Tesla Roadster shows up for about $40k
 
I actually got a letter from the dealership where I bought my car last year asking me if I'd like to trade up because my car was in high demand and they couldn't get enough used models at auction.
 
[quote name='BillyBob29']A lot of dealers actually sell significant amounts of new cars at breakeven and then make their actual profit from the sale of extended warranties, service contracts and accessories. The typical "quick lube" you see at most dealerships is often the most profitable operation of the dealership. The actual sale of cars is just how they attempt to build a client base for their service and parts operations.

The automakers themselves make as little as $250 per car, depending on the model, so yes building autos is a very expensive venture.[/QUOTE]

This, plus dealerships also receive incentives from manufacturers when they reach certain sales milestones.
 
New cars should come with a one time use code that lets you drive them on public roads. If you buy used, you can only drive the car up and down your driveway.
 
[quote name='Puffa469']New cars should come with a one time use code that lets you drive them on public roads. If you buy used, you can only drive the car up and down your driveway.[/QUOTE]

Why?
 
[quote name='Clak']I actually got a letter from the dealership where I bought my car last year asking me if I'd like to trade up because my car was in high demand and they couldn't get enough used models at auction.[/QUOTE]

Classic sales ploy to get you into the dealership. That line has been around forever. It's amazingly effective. (if your car was in demand or not, they sent that letter to thousands of other people, regardless of the year/make/model)
 
''If you log onto this (Cars.gov) at your home, everything in your home is now theirs.''

—Glenn Beck, arguing that the Cash for Clunkers program was nothing more than a secret government plot to gain access over your computer, July 2009
 
[quote name='fatherofcaitlyn']i believe he was being fecestious and trying to make a link to video games.[/quote]

lol :applause:
 
[quote name='BigPopov']Classic sales ploy to get you into the dealership. That line has been around forever. It's amazingly effective. (if your car was in demand or not, they sent that letter to thousands of other people, regardless of the year/make/model)[/QUOTE]
I kind of figured that, but considering this and the fact that it's a small car, figured it could be true for once.
 
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