Why did new car prices spike when everything else was flat?
Cash for Clunkers, the summertime government program that gave consumers up to $4,500 to trade in a clunker for a more fuel-efficient vehicle, helped many new car dealers reduce their inventories in July and August. And most car companies have cut production because of the tough economy so many consumers had less to choose from when they surveyed dealerships in October. The tighter inventories came as the new 2010 model year vehicles arrived en masse and many dealerships and manufacturers were less inclined to offer incentives. “The Cash for Clunkers program may have wiped out the ’09 models that have been sitting there but the brand-new 2010 models come and they can command a higher price for those,” said Dr. James Brock, an economist at Miami University in Oxford, Ohio. Q: How was the used car market affected? A: Clunkers reduced the inventory of used cars because the government required the traded-in cars and trucks to be scrapped. “A lot of (the used cars) were taken off the road i
