Used Trucks For Sale In Delaware, Was Cash For Clunkers a Success?


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Used Trucks For Sale In Delaware – On July 1, 2009, the Car Allowance Cutout System (CARS) or Cash for Clunkers officially began. The aim of the program is twofold: to help stimulate the economy, while also reducing the number of vehicles on the road with low fuel efficiency ratings. The program ended on August 24, 2009 when the $ 3 billion allocated to it was completely exhausted.

Consumers are given vouchers worth $ 3,500 or $ 4,500 to trade with old vehicles to purchase new cars or trucks. If a new vehicle has a combined fuel economy of at least 4, but less than 10 miles per gallon (mpg) is higher than the vehicle being traded, the credit is $ 3,500. If a new vehicle has a combined fuel economy that is 10+ mpg more than the vehicle being traded. the credit is $ 4,500.

Used Trucks For Sale In Delaware

By checking top-line results, Cash for Clunkers must be declared successful. This program produces nearly 700,000 dealer transactions, and the fuel efficiency of the traded vehicles is 15.9 mpg while the fuel efficiency of the vehicles purchased is 24.9 mpg. But Cash for Clunkers is a good example of the law of unintentional consequences because there are secondary impacts that need to be considered before the program can succeed:

* Cash for Clunkers encourages sales that will occur in the near future in a few months. According to a study by Edmunds.com, only 125,000 of the 690,000 purchases will not be made without incentives, or in other words, more than 80% of purchases will occur even if Cash for Clunkers does not provide $ 3,500 and $ 4,500 vouchers Two University of Delaware economists determined that the program had a net cost of $ 2,000 per vehicle transaction and total costs exceeded the benefits of $ 1.4 billion.

* This program reduces the supply of cheap vehicles. By forcing all traded vehicles to be destroyed, the supply of low-cost vehicles available for middle-lower class households is greatly reduced. This reduction in supply in turn causes price increases for similar vehicles available for sale, forcing households to spend more on used cars.

* Japanese and Korean car makers gain market share from the Big Three (General Motors, Ford, and Chrysler). Toyota accounts for almost 20% of total sales, while Honda represents 13% of total sales. Seven of the top 10 models sold are foreign cars or trucks with the Ford Focus, Chevrolet Silverado, and Ford F-150 being the only models produced by US car companies that managed to break into the top 10. The top 3 vehicles purchased are the Toyota Corolla, Honda Civic and Toyota Camry.

* Improved fuel efficiency is not as big as expected. A University of Michigan study found that the program increased the average fuel economy of all vehicles purchased by 0.7 mpg in August 2009, or slightly above 3%. Also to be considered is that if something becomes cheaper (in this case, gas in the form of increased mileage) a consumer will always consume more, thus offset the fuel economy benefits.

* Destroying the clunker engine reduces the availability of parts, making it more expensive. Usually, a car engine is the most valuable component of a used car, but a rescue facility or memo is prohibited from selling any powertrain components from a used vehicle.

The Cash for Clunkers program proves the axiom that if you give someone money for something they will buy, they will buy the object faster. The program also provides a real-world example of a faulty window that is damaged because consumers are paid to destroy a perfectly functioning vehicle. The money these consumers spend on new vehicles cannot be spent on other potentially more profitable purchases.

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