Fallout: Cash For Clunkers

In my neighborhood of Nashville, there are many second-hand car dealerships. There must be a dozen or so within a mile of here. These dealers buy cars at auction, cars that typically have high mileage and are no longer wanted by car rental companies and main-line dealerships, and sell them to people who can't afford a new car.

How will Cash For Clunkers affect them? A story in the Tennessean is the only one I have seen that considers their case:

The resulting vehicle shortage has pushed up used car prices in the last few weeks for vehicles that do escape the crusher, dealers say, and end up at regional auctions where independent used-car lots bid on them.

Common sense will tell you that if we take these cars and crush them, there will be a void in the marketplace," Lewis said. "The government would have us believe that the only cars being traded in are clunkers, but that's not the case. Many of these are not junk, and have lots of good, usable miles left on them. And not everyone can afford a $10,000 or $15,000 car.

Cash For Clunkers benefits the relatively wealthy at the expense of the relatively poor. You won't hear that from the main-stream media though. All I've heard from them are rah-rah-rah interviews with new car dealers and people cashing in their clunker for $4500. What a surprise that they think this program is great!

Related post here.