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Conspiracy theory, or (un?)intended consequences: The cars that will be traded in will be in such bad condition that otherwise they would be exported. Fewer ex

Conspiracy theory, or (un?)intended consequences: The cars that will be traded in will be in such bad condition that otherwise they would be exported. Fewer exported cheap cars increase the demand for small cheap cars from other sources. The main product of the french automotive industry is small cheap cars. This subsidy isn't purely about more bikes, and getting cars off the road, but also - indirectly - to the advantage of the french automotive industry.

cromka 4y ago
I don't think you got your math right: previously one old car would be replaced by one new. The old one would (in your example) find another, presumably poorer local-market owner. With this subsidy, an old car get replaced with an e-bike. It is then scraped or, as you say, exported, so a poorer consumer either saves up and buys a new car, or doesn't. So in both examples you have either same number of new cars sold, or a deficit. Your theory doesn't hold up. In real life, with subsidies like this, you end up with bigger number of used cars on the market, which also happen to be on average younger than up until this point, because a subsidy like this promotes giving up cars that would otherwise be held by their owners for longer. They also flood the market somewhat, so the price of a used car goes down. A poorer customer in market for a used car now has a better choice of cheaper and younger cars, so unlikely they'd be saving to buy a new car, benefiting car manufacturers. In real-real life, there's too many variables and your conspiracy theory just doesn't make sense. EDIT: oh, I now see that you meant that this would increase demand on the markets where used cars were traditionally exported to. Well, that makes sense, but a program like this is unlikely to make a big dent in a used car market abroad, collectively, especially that it is meant to take very old cars off the road, and emerging markets can afford newer cars already? And in particular it wouldn't benefit French manufacturers only.

cromka 4y ago

I don't think you got your math right: previously one old car would be replaced by one new. The old one would (in your example) find another, presumably poorer local-market owner. With this subsidy, an old car get replaced with an e-bike. It is then scraped or, as you say, exported, so a poorer consumer either saves up and buys a new car, or doesn't. So in both examples you have either same number of new cars sold, or a deficit. Your theory doesn't hold up. In real life, with subsidies like this, you end up with bigger number of used cars on the market, which also happen to be on average younger than up until this point, because a subsidy like this promotes giving up cars that would otherwise be held by their owners for longer. They also flood the market somewhat, so the price of a used car goes down. A poorer customer in market for a used car now has a better choice of cheaper and younger cars, so unlikely they'd be saving to buy a new car, benefiting car manufacturers. In real-real life, there's too many variables and your conspiracy theory just doesn't make sense. EDIT: oh, I now see that you meant that this would increase demand on the markets where used cars were traditionally exported to. Well, that makes sense, but a program like this is unlikely to make a big dent in a used car market abroad, collectively, especially that it is meant to take very old cars off the road, and emerging markets can afford newer cars already? And in particular it wouldn't benefit French manufacturers only.