Unexpected Used Cars Boom From Cash For Clunkers

SEE ALSO: Cash for Clunkers Consumer Guide-Qualifying Vehicles

Washington DC August 10, 2009; The AIADA newsletter reported that one unexpected consequence of cash for clunkers is that dealers are selling lots of late-model used cars to customers who couldn't get in on the clunkers deal.

According to Automotive News, some dealers say they're paying sky-high prices for used cars just to have something for all that traffic to look at.

Dealers say many consumers enticed into the dealership by the clunkers program stuck around when they found out their vehicle didn't qualify or that their credit rating couldn't get them a loan. In many cases, they bought used cars.

Heavy new-car incentives usually drive down used-vehicle prices, but that hasn't happened, dealers and analysts say.

To qualify for the federal incentive, new cars must have combined highway and city fuel economy of at least 22 MPG, and light trucks must have at least 18 MPG. Trade-ins must be drivable, less than 25 years old, and have combined fuel economy of 18 MPG or less. They must have been continuously insured and registered to their owners for at least one year.

One analyst says that about half the customers who didn't buy a new car under cash for clunkers bought a used vehicle.