Wednesday, September 30, 2009

An Unintended Consequence of Cash for Clunkers

With Obama's plan causing used cars to be destroyed, used car prices are going through the roof. WSJ reports:
One widely followed measure of used-car prices, the 14-year-old Manheim Used Vehicle Value Index, will likely hit a record when data for September are released in early October, says Thomas Webb, chief economist for Manheim Consulting, a subsidiary of Cox Enterprises Inc...

"What has happened over the last couple quarters is with supply being down, we've seen wholesale prices continue to appreciate. It's just a basic supply-and-demand model," CarMax President Tom Folliard said in a conference call.
Further, during a downturn, used cars tend to climb in price anyway since they are more of a consumption good then a new car, i.e. their value extends over a shorter period of time--it is consumed quicker.


  1. The destruction of 700,000 running cars has not only increased used car prices, it has hurt auto repair shops and car donation charities.

  2. What a nice blog you have..thanks for all this information