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Tuesday, May 31, 2011

Gaming the system

An interesting article about how when the government tries to influence the market you get some unintended results

I recently set out to determine how honest General Motors is being when it claims that demand for the Chevy Volt is exceeding supply. It was not hard to discover that this is not the case as retail sales remain dismal. A web search on vehicle locator sites such as Autotrader and Cars.com exhibit sufficient supply of the Volt, one dealership within 70 miles of my location had six new Volts available for sale.
But I discovered something far more disturbing during my search. Many Volts with practically no miles on them are being sold as "used" vehicles, enabling the dealerships to benefit from the $7,500 credit supplied by the American taxpayers on each car. The process of titling the Volts technically makes the dealerships the first owners of the vehicles, which gives them the ability to claim the subsidies. The cars are then offered to retail customers as "used" vehicles.


You have a few things going on here, GM is able to claim big sales and dealers are able to get a big tax credit, and we get screwed. There used to be a loophole where a golf cart qualified and so people were out buying golf carts and getting them for "free" after the tax credit. Thankfully they closed that loophole ( I think). Moral to this story, don't try and control the invisible hand of the market or it will bitch slap you.
By the way, I checked Cars.com and found three "Used" Volts within 100 miles for sale at the MSRP for a new one. Odometer miles listed you ask? 23, 131 and 2300 miles on the cars.( the one at 2300 miles was listed for 48k)

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