8 Comments

What is wrong with high used-car prices? The CW seems to be that high housing prices are good and high used-car prices are bad, but as someone who’s in the market for the former but not the latter I don’t see why that is necessarily so.

Nothing is more recyclable that motor vehicles.

These “clunkers” had enormous value when they were totally destroyed The engines were filled with cement and the cars were melted down way, way before their time.

AND we spent $3500 in money per vehicle, money we did not have, to destroy all this value.

Outside of ObamaCare, the worst legislation in US history.

As it goes, JB there’s nothing wrong with high used car prices. The problem is the government rather than the marketplace set those prices. Beyond that, many of the cars that were ‘clunked’ had a value to those who would have gladly paid at least a portion of the 4500.00 payout in order to get into what normally would have been a better running, newer, safer car. All C4C did was destroy material wealth and attempt to be a thank you to the UAW for Obama’s electoral support. We will be stuck with skewed prices for a while because of this.

Additionally, the case could be made that C4C did very little, if anything to increase fuel economy or reduce pollution. The necessary increase in economy from a clunked car to a new one was miniscule, and the amount of pollution inherent to building a new car more than offset any so-called gain by destroying an older car.

I don’t mind paying more for a 10 year old Mercedes E Class Wagon- that’s what the market usually dictates. I do, however mind paying well over the odds for an 8 year old Ford Taurus because of a government-led shortage.

@jb: I’m on the opposite side of the spectrum. Don’t need the former, but would like the latter. I’m driving a 15-y/o car that wasn’t eligible for the Cash for Clunkers back then. As it deteriorates, it’s starting to turn into one of those nasty things they wanted to take off the road.

Used car prices in my area, for a 5-y/o car, are easily $3K-$4K more expensive than they were before C4C. When asked why, the dealers all cite ‘scarcity’. Real estate, OTOH, is selling at a 40% discount on 2009 prices.

Fair enough.

It is because even used car values drop the moment you drive them off the dealers lot. Whereas, a home usually maintains its value and can provide tax deductions. In both cases, the values of the used car and the house have been greatly manipulated by the Federal Govt.

This run up in used car prices was entirely predictable. All anyone had to do was open up any eco 101 book to the “broken window” chapter.

I can only offer anecdotal evidence, but I don’t see a shortage of used cars on the lots. As I go to different sites for another job, I will pass by 10 – 15 primary and secondary car lots and none of them have spaces open.

The reason I started to notice was that I have a friend who recently had a stroke and is looking to trade in his car on a smaller, more efficient car.

The dealer kept harping on how the prices of used cars were so high because of the Cash for Clunkers program. When he looked at my friend’s trade in car, he offered him way below Kelly Bluebook on a vehicle that was in very good – excellent condition. The dealer offered him below the “poor” value of the car. The car has one flaw – a burn in the center console from a cigarette. Otherwise it is immaculate, well maintained and not a scratch on it.

While I can see the logic behind saying used cars are more expensive because many were taken off the road, to some extent I am wondering if that is an excuse for dealers to charge more for cars now since the buying cycle of people changed. In other words, they raised prices because they do not have as many customers looking for cars today after the C4C fiasco. They need to make more per sale to stay alive.

As I said, this is all anecdotal, and I am only saying what I see and have experienced in my neck of the woods.