The Cash for Clunkers program seemed to help the failing auto sales industry, but at what cost? Auto repair shops rely on older cars to survive. The honest repair shops make an honest living providing repair and services to consumers that allows them to keep their cars well after the payments stop. This is in line with what most economist would like to see American’s do, get out of debt! By repairing and servicing a car it can last for a long time and the overall cost of ownership is significantly cheaper than having car payments. The “Cash for Clunkers” program takes these cars off the road and replaces them with newer vehicles under warranty for repairs. This mean that the finance companies gain revenue, the dealership gains revenue, but the repair shops lose revenue. The normal rate for vehicle turn over is out the window now, causing a sudden impact on the repair shop industry. Under normal conditions people often by cars if their is no longer economically viable to repair and this turn over process take place over a period of time. What the Government has done is cause an instant change in the landscape that is affecting repair shops and eventually consumers. If repair shops no longer have cars to work on all at once they will go out of business, then when these “cash for Clunker” cars come out of warranty there will be far less repair shops around to provide service and repair. Adding the fact that these cars will all come out of warranty at about the same time, this will mean there will be a greater need than supply for auto repairs and service. The rule of supply and demand will kick in and people will be forced to pay a lot more to have these “Cash for Clunker” boomers worked on. Now, since the auto repair industry employs 3 times as many people as the manufacturing industry, the impact on the economy will be more dramatic than the sales industry. Maybe there would have been a more equitable solution that would not have an adverse affect on the repair industry. Perhaps a “Cash for Clunkers repair” program allowing people to have their vehicles repaired to bring up the fuel mileage.
Tags: auto, automobile, automotive, economy, fuel, repair, repairs