I’m not implying the 30 percent increase in the average price of a used car is a direct result of the Obama administration’s Cash-for-Clunkers program, but it certainly is a factor, and nobody is mentioning it.
I’ve heard a few stories about used car prices the past day or so and the Associated Press is reporting prices are at their highest in 16 years.
People are holding on to cars and trucks for about a year longer than they did before the recession, which has created a tight supply of used vehicles. So few are on the market that prices have risen to their highest level in at least 16 years.
Dealers are paying an average of $11,660 for a used car or truck, up almost 30 percent since December 2008.
The recession is a factor, inflation and the change in the value of the dollar is a factor. Owners holding on to their cars an extra 9.5 months is a factor, but that may not be a direct result of the economy.
Why are these reports – and I’ve seen a few – mentioning Cash-for-Clunkers? The 2009 program took almost $3 billion of inventory off the market completely. That was about 700,000 cars and certainly that has to be a factor in the 30 percent price jump since late 2008.
I’ve looked for information on what happened to the used car parts market after Cash-for-Clunkers, but did not find anything. I’m willing to bet the cost of used parts for many of the cars that were destroyed has gone up quite a bit too.
So much for recycling.
Who does this hurt the most?