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Thursday, April 30, 2009

Autos and Economics: Cash for Clunkers

Further to my early post on Cash for Clunkers, see the blog on the Morgan Stanley Global Economic Forum of April 28, 2009. It adds the point that if the market value of a used car is already (say) $2000 and the "clunker" subsidy is $4000 then the net effect is smaller, similar to putting an extra $2000 rebate on a car. Plus it would be further muted by the various strings attached to the two main pieces of draft legislation winding their way through Congress. The bottom line is that it will cost a lot but won't boost sales much. Their blog includes methodology and estimates.