Aug

15

ClunkersOne of many interesting things about the 'Kash for Klunkers' program is that a quick estimation of the average MPG for the replacement vehicles shows that they barely meet the current government mileage standards and fail to meet those that go into effect for the 2011 model year, which is just one year away.

According to the WSJ [preview only, subscription required for full article], nine of the top ten vehicles are considered passenger cars and they average 29.67 MPG, and that number is biased upward by the Toyota Prius, which is number four on the list at 46 MPG. By comparison, the new standard is 30.2 MPG. The only non-car on the top ten is the Ford Escape, which gets a pitiful 23 MPG, which is less than the 24.1 MPG. While this is an imperfect estimate of either the Top 10 sales or those of the entire K for K program, there are no statistics available on actual sales and unless the sales for the top four vehicles are approximately equal, there is little likelihood that the average mileage of the Top 10 meets next year's standards.

Allan Millhone sees an investment angle:

Companies in the parts business: NAPA, AutoZone, et. al., may benefit in increased sales over time if the "Cash for Clunkers" program continues. Salvage yards are required to keep the clunkers in another area and cannot sell the motors and other parts as they customarily do with the rest of their yard. In time this will create a shortage for many parts that one may now purchase from salvage yards. Aftermarket parts will become scarce and the part stores will benefit while the consumer regrettably will have to pay higher prices.


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