On Wednesday, Ed Morrissey at Hot Air posted an article about the impact of Cash for Clunkers on the current used car market. Because of the number of used cars destroyed as a result of the Cash for Clunkers program, used cars are scarcer and more expensive.
The article cites the impact of the program on some used car prices:
- Cadillac Escalade - 35.6% increase
- Chevy Suburban - +34.2%
- Dodge Grand Caravan - +34%
- BMW X5 - +33%
Generally speaking, people who buy used cars buy them because they are less expensive than new cars. A quality used car will last almost as long as a new car and be cheaper to buy. I live in Massachusetts, where the excise tax on a new car is considerably more than the tax on a used car. I bought a new car in February. In addition to the sales tax on the car, I paid a personal property tax of over $500. Had I bought the same car a year old, that cost would have been closer to $200 or $300.
The article concludes:
"As predicted last year, the people most hurt by the price increases are those who can least afford them. The used-car market usually attracts people who need transportation on a budget, who cannot afford to buy new. By destroying a quarter's worth of trade-ins in three weeks and permanently taking them off the market, the Obama administration has forced an artificial inflation by supply restriction. Moreover, they did so by subsidizing new-car sales that would have occurred anyway, eating up three billion dollars in taxpayer money.
"In other words, the White House spent $3 billion to make used cars more expensive for working-class families. Nice work."
This is another example of government interference in the free market. When the government gets involved, there are always unintended consequences.
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