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Cash for clunkers makes it through the Senate
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The US Senate passed the “Cash for Clunkers” legislation Thursday. It is now on its way to be signed by President Obama. Based on his support for the legislation, he is sure to sign it.
Dealers must register with the government to participate and although the legislation allows 30 days to get the program rolling, it will apply to purchases between July 1 and November 1, so if your local dealer is willing, you can start shopping now. The program is currently limited to 250,000 vehicles and when that number is hit, the program may terminate early. The low limit was key to the acceptance of the bill by many auto enthusiasts, as it will limit the number of vehicles hitting the crusher. It also helps lessen the impact to the used market and replacement auto parts suppliers like Advance Auto and NAPA.
It will be interesting to see if the government can stop this program as specified in the language, the automakers themselves have trouble ending a rebate program. These things are easy to start and very difficult to stop without killing sales. I also suspect that the manufacturers may take the opportunity to reduce or eliminate their own rebate programs with the government subsidy being so large, so shop early.
The rules are pretty straightforward, here they are:
Eligible new vehicles:
• Cars must have combined highway and city fuel economy of at least 22 mpg.
• Small light trucks must have combined fuel economy of at least 18 mpg.
• Large light trucks must have combined fuel economy of at least 15 mpg.
• Must have suggested retail price of $45,000 or less.
Trade-ins:
• Must be in "drivable condition".
• Must have been continuously insured and registered to their owners for at least one year.
• Must be less than 25 years old.
• Must have combined fuel economy of 18 mpg or less.
• Must be turned in for scrappage.
To qualify for a $4,500 voucher:
• New cars must beat the trade-ins' combined highway and city fuel economy by at least 10 mpg.
• New small light trucks must improve on the trade-ins' combined fuel economy by at least 5 mpg.
• New large light trucks must beat the same-class trade-ins' combined fuel economy by at least 2 mpg.
To qualify for a $3,500 voucher:
• New cars must improve on the trade-ins' combined fuel economy by at least 4 mpg.
• New small light trucks must beat the trade-ins' combined fuel economy by at least 2 mpg.
• New large light trucks must improve on same-class trade-ins' combined fuel economy by at least 1 mpg, or they must replace a larger-class light truck from model year 2001 or earlier.
• The largest light trucks qualify if their trade-ins are the same size or larger and from model year 2001 or earlier.
Other rules:
• One voucher per person, and one voucher per trade-in for vehicles with multiple registered owners.
• Qualifying leases must be at least 5 years long.
• Vouchers may be combined with other federal, state or local incentives or vouchers.
• Vouchers may not offset rebates or discounts offered by dealers or automakers.
• Vouchers do not count as income for tax or government assistance purposes.
• Dealers may not charge any additional fees to customers who use the vouchers.
• Dealers must tell customers the true scrappage value of trade-ins.
• Those to whom dealers give the trade-ins for scrappage may sell any of the vehicles' parts, other than the engine blocks and combined drive trains.
• Dealers may keep $50 of anything they receive for scrapping the vehicle to help with program administration.
It will be interesting to see the response. I am guessing the 250k vehicle mark will be hit prior to the end of the program. I hope someone keeps a log of the vehicles that are scrapped with this program. That would go a long way to assuage the fears of many auto enthusiasts that these type of program will cause the death of restorers and the automotive aftermarket. Maybe if we are only crushing old 1990’s minivans and worn-out pickups, we will still have something around the folks will want to restore in the 2020’s.
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