Apr 28, 2009

Should 'Cash for Clunkers' Include Used Cars?

The proposed “Cash for Clunkers” plan that would offer a government bounty on old cars if they are replaced by new, fuel-efficient ones is controversial enough already, but now the nation’s biggest used-car retailer is weighing in on the subject. CarMax Inc., unsurprisingly, is urging Congress to include a consumer incentive to buy used vehicles in the Cash for Clunkers legislative proposals. According to the company, “by including used vehicles, the legislation is better positioned to promote fuel efficiency, save jobs and help more Americans afford a car.”

The company notes that for millions of American families, purchasing a new car is too expensive, even with a voucher or tax credit. It cites a recent review of an online classified vehicle Web site that indicates that the average price for eligible (read: fuel-efficient) new cars is about $7,000 more expensive than potentially eligible fuel-efficient used cars. It suggests that including used cars in the Cash for Clunkers incentive will help those families who cannot afford to buy a new car. (Certainly such a provision would also help CarMax and thousands of other used-vehicle retailers as well, included new-car dealers who sell used cars.)

“More people will be able to participate in the program, more jobs will be saved, and more fuel-efficient vehicles will end up on the road by including used vehicles,” said Tom Folliard, CarMax president and chief executive officer. “Excluding this segment of the auto industry could potentially have a negative impact on millions of American workers and thousands of U.S.-based businesses. Nationally, used-car sales outnumber new car sales nearly three to one.”

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