In this WSJ video,"Time to Trade In That Used Car?" four reasons are given for record-high used vehicle prices:
1. Earthquake-related reductions in Japanese production, leading to shortages of some popular new cars like the Toyota Prius.
2. The recession-related collapse in new car sales in 2008-2009 is now contributing to a below-average number of trade-ins and an overall shortage of used cars on dealers' lots.
3. Because of the weak economic recovery and labor market sluggishness, demand for new vehicles is soft, and demand for used cars has increased as cost-conscious consumers remain cautious when making major purchases, and look for ways to save money when buying cars.
4. Higher gas prices are also making car buyers more cost-conscious, which has increased demand for used cars, especially 4-cylinder vehicles.
5. Update: The destruction of almost 700,000 used cars in the summer of 2009 during the "Cash for Clunkers" program could also be contributing to the current shortage and high prices for used vehicles. (HT: LoneSnark)
5. Update: The destruction of almost 700,000 used cars in the summer of 2009 during the "Cash for Clunkers" program could also be contributing to the current shortage and high prices for used vehicles. (HT: LoneSnark)
Did we not also crush a bunch of them during cash-for-clunkers?
ReplyDeleteYup. Maybe we need to demolish an assload of good, functional homes (not just the tear-downs in blighted areas of Detroit) to prop up home prices. That would work to "restore" housing prices. (Please note that this is submitted with tongue firmly planted in cheek, lest I get subsequently blasted in later posts).
ReplyDeletehow about offering a greencard to an immigrant that can pay cash for a house?
ReplyDeleteThis comment has been removed by a blog administrator.
ReplyDeleteMaybe we need to demolish an assload of good, functional homes
ReplyDeleteYeah. I bet Obama, in his wildest fantasies, never supposed that his economic legacy would read that his policies "restored the used car market".