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A “cash for clunkers” progra m proposed in the American Cleanb Energy and Security Act would give car buyers a creditt of upto $4,500 toward new-car purchases. That could reignite auto which are on pace for the worst yearsince 1979. “It’a a spectacular idea,” said Rhett CEO of in Columbus. “It’ll speed up business.” The Hous e Committee on Energy and Commerc e estimatesthe one-year program could add as many as 1 million sales this year. That would be a 10 percenr boost to the 10 milliomn vehicles Americans are expected to buyin 2009, accordingg to J.D. Power & Associates. U.S. Rep.
Betty D-Ohio, introduced the program both as an amendment to the energy bill and asstandalone U.S. Sen. Sherrod Brown, D-Ohio, stressed the importance of the bill in a May 20 discussionm with reporters about thefederal government’s work to help the auto industry in Brown said he couldn’t predict the proposal’ws chance of approval in Congress, but he’d like to see the incentiveds get to buyers quickly.
He said it makes sens to pass the program separately to get it President Barack Obama has said he supports theHouse version, whicy is in committee, while the Senatse is working on a version, which may carry higher fuel economu standards, according to published reports. The program, which severap European countrieshave instituted, would discount qualifying new-cad purchases by either $3,50 or $4,500, depending on fuel efficiency Eligible cars for trade-in would have to be at leasty a year old and have a combinedx EPA fuel economy rating of 18 milea per gallon or less.
The buyer would get a $3,500o credit if the new vehicld gets between 4 and 9 mpg more thanthe trade-inb and the full $4,5000 credit if the new vehiclde gets at least 10 mpg better. For the trade-in minimum woulrd be 18 mpg, with a 2 mpg improvement necessartfor $3,500 and a 5 mpg boost for the $4,5090 credit. Large light-duty trucks, which weigh between 6,009 and 8,500 pounds, would have a trade-in standarr of 15 mpg and improvement thresholdw of 1 mpg and2 mpg. Work which are more than 8,50o pounds, do not have mileage ratings, but 2001 vehicles or oldert would be eligible fora $3,500 credit.
Thougjh the credit would be considered cash fromthe buyer’sz point of view, consumers woulsd not touch the money. Dealers would get an electronic reimbursementr from the government forthe credit, accordintg to information from Congress. Germany, Francwe and the United Kingdom have fleetmodernizationj programs. Germany’s program boosted auto salee by 20 percent since its February according tothe . Any increase in domestidc salesis welcome. Ricart said his dealership group, whic sells six brands, five of which are foreigj makes, expects to benefit across most ofthe nameplates.
Foreigmn vehicles will do well, while Ford has made fuel-efficiencg improvements that should attracrt customersas well, he said. “I don’tt think you’ll see people buying $35,000 cars, but you’lo see people who are looking for cars foreverydag transport,” he said. Ricart said the only concerm for dealers is how quickly the government wouldreimburse them. The supports the Housde program. “A cash for clunkersa program gets gas-guzzlers off the road and replacesz them with more fueleconomical vehicles,” Legislatives Affairs Vice President David Reganb said in a statement.
Trade-ins wouldn’tg be resold, but instead sent to a salvage operatofr tobe scrapped. How that would be enforced has yet tobe Regan, in an April question-and-answer session posted on the organization’sa Web site, said the two key featurews for dealers are that vouchers must be treatedc like cash from customers to lower the amountg financed, and the program wouls have to include all car makers, not foreign or domesti alone. “Dealers regardless of nameplateware suffering,” he said.