Originally Posted By: KB2008X
Originally Posted By: Wolf359
Originally Posted By: DC44
Originally Posted By: mrsilv04
The Cash for Clunkers program started it...
Why do people blame cash for clunkers as the cause of the price rise in the used car market. I would say the top ten cars traded in on cash for clunkers were not cars that were purchased in huge numbers in the used car market. I would say it has more to do with the economy and reliability of cars now. 100k in not high mileage anymore. A new car will cost 25-30k financed. They can charge 15k for a car that should be 12k in reality. People will buy because they can't afford the cost of a new car but need something halfway reliable. For the most par America is a very car dependent country. You just can do to well without one.
I feel sorry for the people that are in bad financial situations now because the are stuck in positions were the have to pick their poison and are forced to make not so great financial decisions. Do I purchase a car I can barely afford but it reliable or do I buy a beater. I don't have the money to purchase a car for cash, let alone have the time to save for it because I really need a car. If I choose a beater, will I have to: throw money at it, play 'when are you going to screw me', possibly miss work, loose money, put my job in jeopardy and be back were I started.
Many people seem to think cash for clunkers lead to an increase in the price of used cars. There's no real reports out there that really support that position. In reality when you go from making 17 million cars a year down to 11 or 12 million cars a year. Basically in 2005, 17.4 million cars were sold in the US, in 2006 - 17, 2007 - 16.4, 2008 - 13.5, 2009 - 10.6, 2010 - 11.8, 2011 - 13. So from 2007-2011, about 19.1 million less cars were sold. Versus 680k cars that were crushed in cash for clunkers. That decrease is probably 96% of the reason why the price of used cars are high, not that much supply. And also why market prices for good used cars are high, they just didn't make that many of them. Also with a value up to $4500, those were NOT good used cars. Don't forget that Hurricane Sandy alone destroyed 250k cars, and that was all types.
A significant portion of the cars that were part of the cash-for-clunkers program were just a few thousand miles away from the junkyard, so they would have been off the road, and unavailable for sale, anyhow. Another chunk of those cars were old, big, heavy beaters, cars and trucks, with lousy gas mileage that still had life in them, but the owners took advantage of the clunker program to get more value for them than they were worth while the takin' was good, and typically they were spare vehicles or were kept for 16 y.o. drivers. In other words there wasn't that many saleable vehicles scooped up in the clunker program.
Wolf makes a great point regarding hurricane cars. The incidence of tornados, hurricanes, floods and the like is way up from what it used to be. That's claiming a fair number of cars, too, and at a time when fewer used cars are coming onto the market.
There are many small factors that when added up have impacted the prices on used cars.
I agree with both you and wolf. It's also interesting on how cars move around the country. When I look at the carfax report for cars on line in my area many of them come from the northern states. In fact my camry was originally sold in Pennsylvania and made its way down south.Our local economies are a lot more intertwined than the average person may think. I really hadn't thought about the hurricane sandy angle. I really din't follow it much other than knowing that, an area that has a high concentration of the US population was hit by the storm.
I get tired of hearing that cash for clunkers is a major cause for the price of used cars now. As stated most of the cars traded in for cash for clunkers were not cars that would have did well or the used car market anyway for the majority of buyers and there are many other factors including inflation that have caused the increase price in cars.
Truthfully though,buying and owning a car is still cheap in america retaliative to other countries.