By forcing all traded-in vehicles to be destroyed the supply of inexpensive vehicles available to lower and middle class households was greatly reduced. This reduced supply in turn caused an increase in price for similar vehicles available for sale, thus forcing households to spend more for used cars. Toyotas accounted for almost 20% of the total sales, while Hondas represented 13% of the total sales. Seven of the top 10 models sold were foreign cars or trucks with the Ford Focus, Chevrolet Silverado, and Ford F-150 being the only models manufactured by US auto companies to crack the top 10. The top 3 purchased vehicles were the Toyota Corolla, Honda Civic, and Toyota Camry. Cash For Cars Sydney
A University of Michigan study found that the program improved the average fuel economy of all vehicles purchased by 0.7 mpg in August 2009, or a little over 3%. What also needs to be considered is that if something becomes cheaper (in this case, gas in the form of improved mileage) a consumer will invariably consume more of it, thus offsetting the fuel economy gains.Typically, the car’s engine is the most valuable component of a scrapped car, but the salvage or scrap facilities were prohibited from selling any powertrain components from the scrapped vehicles.The Cash for Clunkers program proved the axiom that if you give someone money for something they were going to buy anyway, they will buy that object sooner. The program also provided a real world example of the broken window fallacy as consumers were paid to have their perfectly functional vehicles destroyed. Money that these consumers spent on new vehicles could not be spent on other potentially more beneficial purchases.