Why used cars are scarce - and expensive

Yes, Obama's Cash for Clunkers program is definitely one reason used cars are in increasingly scarce supply-- and much pricier than they used to be. But another reason relates to something liberals despise: "trickle down" economics or, in respect to the increasing scarcity of used cars, the fact that low-income used car buyers do better when wealthier Americans (those who can afford new cars) do better.

The reason used cars have gotten increasingly scarce and expensive is the subject of a Wall Street Journal article, "Amid New Car Boom, Used Cars Are Gold." Its observations are illuminating:

The shortage of used cars stems from the deep plunge in new-car sales between 2008 and 2010, and the virtual disappearance of new-car leases during the financial crisis. As a result, three-year-old cars are now hard to find and even older models are holding their value.

Another factor is a change by the three Detroit U.S. auto makers. To keep factories humming, they once leased tens of thousands of new cars to rental car fleets and then moved them onto dealer lots as used models after a few months.

There are fewer of those vehicles because manufacturers cut excess production capacity in recent years. Cash-for-clunkers rebates also took many older vehicles off the road.

The scarcity has pushed up used car prices, often to the point that consumers who finance a purchase with subsidized interest rates can get brand new vehicles for about the same as a monthly payment required for a late-model used car.

A 2013 Toyota Corolla LE now sells for about $18,000 new and a 2010 model costs about $14,200. However, monthly payments would be about $300 for each, assuming the new-car buyer gets Toyota's 1.9% for 60 months rate and the used-car buyer pays a 5% or higher interest rate.

A used car dealership in Texas once put up an amusing ad on its billboard: "If you have a car, you can get a job!" Now, you have to wonder how many Americans can no longer afford a used car - and are suffering as a consequences or even unemployed. But, hey, look at this from the perspective of Obama and Democratic elites. Fewer used cars means less pollution and a greener planet. Like in Europe, more Americans will thus ride bicycles and take the bus. In the end, this benefits every American - and even the entire planet. 

Yes, Obama's Cash for Clunkers program is definitely one reason used cars are in increasingly scarce supply-- and much pricier than they used to be. But another reason relates to something liberals despise: "trickle down" economics or, in respect to the increasing scarcity of used cars, the fact that low-income used car buyers do better when wealthier Americans (those who can afford new cars) do better.

The reason used cars have gotten increasingly scarce and expensive is the subject of a Wall Street Journal article, "Amid New Car Boom, Used Cars Are Gold." Its observations are illuminating:

The shortage of used cars stems from the deep plunge in new-car sales between 2008 and 2010, and the virtual disappearance of new-car leases during the financial crisis. As a result, three-year-old cars are now hard to find and even older models are holding their value.

Another factor is a change by the three Detroit U.S. auto makers. To keep factories humming, they once leased tens of thousands of new cars to rental car fleets and then moved them onto dealer lots as used models after a few months.

There are fewer of those vehicles because manufacturers cut excess production capacity in recent years. Cash-for-clunkers rebates also took many older vehicles off the road.

The scarcity has pushed up used car prices, often to the point that consumers who finance a purchase with subsidized interest rates can get brand new vehicles for about the same as a monthly payment required for a late-model used car.

A 2013 Toyota Corolla LE now sells for about $18,000 new and a 2010 model costs about $14,200. However, monthly payments would be about $300 for each, assuming the new-car buyer gets Toyota's 1.9% for 60 months rate and the used-car buyer pays a 5% or higher interest rate.

A used car dealership in Texas once put up an amusing ad on its billboard: "If you have a car, you can get a job!" Now, you have to wonder how many Americans can no longer afford a used car - and are suffering as a consequences or even unemployed. But, hey, look at this from the perspective of Obama and Democratic elites. Fewer used cars means less pollution and a greener planet. Like in Europe, more Americans will thus ride bicycles and take the bus. In the end, this benefits every American - and even the entire planet. 

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