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December 17, 2011


As you can see, used car prices are really volatile, so it's hard for me to see an effect of new technologies.

You speculate about the impact of technology and post that chart but don’t comment on the most striking feature of the chart: the 25% increase in used car prices starting partway through 2009…

Wonder what happened in mid-2009 that might have impacted the price of used cars? Almost seems like it could have been one of those unintended consequences of some poorly thought out government program. Wonder what it could have been?

Srsly? -- you're willfully mis-reading the chart. The swing begins in 2008, when the *economy collapsed*. Remember that? Bush was still President, kind of thing?

First effect seems to be: drop in used car prices, as people try not to spend more than they absolutely have to.

Then: swing upward, as people who've postponed buying a car come to the point where they absolutely have to, but they can't afford a new car. So used cars go up in price, because they're always cheaper in absolute terms than new cars.

Also note the very similar pattern but with lower amplitude in 2003-05.

Re the picture. You look at the hat that yellow-vest is wearing, and you have to ask who the slicker is here?

So, disappearing over half a million vehicles didn't have any affect?


I'm not sure it had as significant an effect as you'd expect. Look at the bouncing around in 2003-05, which had the same basic shape as that in 2008-10 but lower amplitude. Both periods had increased unemployment, but the current recession is much, much worse.

Basically, this is exactly the pattern suggested if unemployment and other recession factors are driving used car prices, and Cash for Clunkers had almost no effect.

That's why I said I'd be interested in a longer time-series, to see if this is a general pattern in all recessions.

The half million vehicles were just a drop in the bucket, even assuming that they were all salable, drivable vehicles. Given the payout limits, most of those cars would have been fairly old cars near the end of their life cycle.

The fact is that since the start of the recession, there has been a deficit of over 16 million new car sales. That was the last time I looked. It may be more now.

That's 16 million fewer used vehicles being turned in and re-sold, not mention more people looking to buy used instead of new due to the economy.

Supply. Demand. You do the math.

When I was looking to buy a cheap used car as a second vehicle back in late 2008, I ended up buying new instead because there were better deals to be had.

I'd advise anyone thinking about buying a used car to seriously consider something new instead. There are great deals to be had and interest rates are very very low. Unless you have issues with credit or car insurance, it may very well be the best use of your money.

Interesting stuff. Here in Japan, there is something called a shaken, which is a combination of inspection/required insurance. The whole process acts to keep the used car market much smaller and more expensive than the US. Of course, this is only possible because Japan has an extensive public transportation network, so having a car is not the necessity it often is in the states.

I remember reading some time ago that it's prohibitively expensive to keep a used car older than 10 years in Japan and that Japan ships a lot of these older, pre-owned vehicles to other countries for re-sale.

Very true Chuchundra. Russia has put an import duty on used cars, but 15 years ago, you used to see these rusty freighters packed to the brim with used cars up in Hokkaido, in the port of Otaru. I'm sure the trade is still going on, and these pics are a good example of an capsized ship that was overloaded with used Japanese cars, though all these cars look in good nick. In the old days, when there was no import tax, they would take any old beater and strap it, cause the parts would be worth a huge amount

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