It doesn't. Dude's riding his hobbyhorse into a wall.

Most cars that left the road were the oldest and heaviest. New cars bought under that program tended to be economy cars and are already a decade+ old. To suggest that it took inventory off the road affecting today's markets doesn't hold water.

The biggest issue is that car companies make more money off reselling the loan than they do off the car. Years ago we tried to buy a Subaru in the NYC metro area in all cash and were continuously turned away. Dealers didn't make money off the cash sale, they were spiff'ed off the loan. We had to take the loan and then pay it off in order to get the car.

Since then it's gotten worse. Expensive cars (luxury, trucks) are sold with 72 month loans and are underwater shortly after purchase. It's been a race to the worst terms and empowering the worst purchases to the worse equipped buyers. I'm continuously amazed it's gone on as long as it has.

Ironically, luxury car dealerships will have no problem taking your cash. There are lots of people that are rich enough to insist upon buying a new car with cash, but those people generally don't drive Subarus.

Surprised to hear you were turned away. Usually they will take your money, just not give you any sort of deal. Either way, I think these days it makes little sense to buy new cars of the lot. If you want a new car, just go on the website and build out what you want, pay, and it's there 2-3 months later.

What I was told by a friend at an OEM is that lower-end the demand for lower end Subarus and Hondas was so high in the NYC area that it made sense to turn down the all cash offer as they'd likely sell the car with a loan the next day.

That's so frustrating. I'm in NYC and had a crappy experience shopping for cars as the pandemic was taking off. The dealers seems dis-interested, but they would certainly sell a car for their asking price. I ultimately ended up going with a cheap old used car that I bought directly from the previous owner. If I get to a point where I want a new car, I think I'll just order it.

>Most cars that left the road were the oldest and heaviest.

Pure fantasy.

Old commuter cars and family haulers were what was removed. Stuff like 90s Suburbans and F150s got turned in at a much lower rate than things like Cavaliers and Tauruses.

Remember, times were not great back then, trucks and SUVs are useful vehicles. You're not gonna get a lot of people who have old ones trading them in on a Camry because that's a net downgrade in capability. And the SUV craze was new enough that the trucks and SUVs that had been bought frivolously were still mostly worth enough to be unaffected.

>To suggest that it took inventory off the road affecting today's markets doesn't hold water.

It definitely put the used car market into a state it could have not otherwise gotten into. Whether it ever "recovered" is a matter of opinion. Many people say the private party shitbox market has never been the same but I personally think that's rose tinted glasses.

There are no affordable used cars now, or at least not nearly as many as there would have been, driving up price and the need for a loan.

Under 700k cars were exchanged as part of the "cash for clunkers" program, or roughly one out of every 400 the cars on American roads. Emphasis on exchanged: most people went out and bought new cars with the rebate.

Plus, all of this was over a decade ago. It's irrelevant on both axes.

I agree it's not relevant today but "1/400" is a really dishonest way of framing "removed the bottom of the market"

All the cheap beater cars that people just getting on their financial feet would have bought evaporated overnight.

> All the cheap beater cars that people just getting on their financial feet would have bought evaporated overnight.

I don't think this is true. If you look at the cars that were destroyed as part of the CARS program, they don't have a large overlap with popular used cars in the US. The top CARS trade-ins were mostly 4WD SUVs and minivans; the most popular used cars a decade ago were (and are) mostly 2WD sedans.

Another way of thinking about it: the entire point of the CARS program was to incentivize car owners to prematurely (from their perspective) buy a new car by offering them credit for their old one. Combined with the disconnect between the cars traded in and the actual used car market in the US, I think it's safe to say that most of the cards exchanged in the program would not have entered the used market and therefore did not meaningfully impact it by going to the scrapyard instead.

>I don't think this is true. If you look at the cars that were destroyed as part of the CARS program, they don't have a large overlap with popular used cars in the US. The top CARS trade-ins were mostly 4WD SUVs and minivans; the most popular used cars a decade ago were (and are) mostly 2WD sedans.

Here's the top ten list:

1. Ford Explorer 4WD

2. Ford F150 Pickup 2WD

3. Jeep Grand Cherokee 4WD

4. Ford Explorer 2WD

5. Dodge Caravan/Grand Caravan 2WD

6. Jeep Cherokee 4WD

7. Chevrolet Blazer 4WD

8. Chevrolet C1500 Pickup 2WD

9. Ford F150 Pickup 4WD

10. Ford Windstar FWD Van

Everything on that list is prime shitbox, except arguably the trucks (because they cost a little much to feed).

What do you think happened to crappy vehicle prices as soon as the program was announced?

Anything that moved and qualified got listed for sale at approximately the same price as the rebate. Hence no more "$500 beaters" (not really $500 by that time but you get the point).

You see the same thing today where the scrap value of catalytic converters drives up the price of the cheapest cars because that's the alternative way of monetizing those vehicles

More precisely, it removed the portion of the bottom of the market belonging to people who were on the fence about upgrading and making their cars available, so in that way it's similar to EV tax credits going to wealthy people to subsidize their consumption, but with the added hardship on the people down market.

I sympathize with the would-have-been sellers. I spent probably 8 hours recently to sell a 16 year old car for $4,200, and it would have been easier to do it the cash for clunkers way. But people buying that car are unable to get something newer or want to get their feet under them financially.

72 million passenger cars have been sold in the US since the program so I don't follow how the <0.7 million scrapped in 2009 (valued to be worth less than 3 billion dollars back then) for newer cars have a noticeable impact on any of this 1.6 trillion dollar loan market 13 years later.