Senate Passes "Cash for Clunkers" Program
Senate passes $1 billion 'cash for clunkers' program over strong Republican opposition
By Ken Thomas, Associated Press Writer

WASHINGTON (AP) -- Congress approved a "cash for clunkers" program Thursday to provide government incentives of $3,500 to $4,500 to motorists who trade in their gas guzzlers for more fuel efficient vehicles after Senate Democrats narrowly defeated a Republican effort to kill the plan.

Auto state senators said the program would help hard-pressed car dealers and automakers by bringing buyers into showrooms, and they got help from President Barack Obama and Vice President Joe Biden, who made calls to wavering Democrats urging them to keep the plan alive.

"This is an emergency for families and small businesses -- for an industry that has been the backbone of our economy for a generation," said Sen. Debbie Stabenow, D-Mich., who sponsored the proposal.

Opponents said it would increase the federal debt without doing much to get expensive-to-operate vehicles off the roads.

Senate supporters of the program overcame a procedural hurdle by the plan's leading opponent, Sen. Judd Gregg, R-N.H., on a 60-36 vote, winning the minimum number of votes needed to keep the program in a $106 billion war-spending plan that the Senate passed later Thursday.

The House approved the cash for clunkers bill last week on a vote of 298-119 and Senate Democrats attached it to the war-spending bill. The overall bill now goes to the White House for Obama's signature.

Four Republicans -- Kit Bond of Missouri, Thad Cochran of Mississippi, Susan Collins of Maine and George Voinovich of Ohio -- voted with two independents and 54 Democrats in favor of the clunker measure, while Democrat Ben Nelson of Nebraska was opposed along with 35 Republicans.

Sen. Maria Cantwell, D-Wash., changed her vote to support the vehicle incentive plan and spoke by phone with Obama during the vote.

Cantwell spokeswoman Ciaran Clayton said Obama "acknowledged Senator Cantwell's concerns that the cash- for-clunkers program ... did not do enough to meet our nation's urgent need to reduce foreign oil dependence" and vowed to work with Cantwell and others to "maximize the number of efficient cars on America's roads."

In addition to Cantwell, Obama and Biden reached out to Democrats Patrick Leahy of Vermont, Claire McCaskill of Missouri and Michael Bennet of Colorado, according to two people familiar with the outreach. They spoke on condition of anonymity because they were not authorized to speak publicly.

Obama has encouraged Congress to approve the consumer incentives for new car purchases as part of the government's efforts to restructure General Motors Corp. and Chrysler Group LLC. The bill provides $1 billion for the program from July through November.
Huh? I'll bet people will end up buying the least expensive cars, like the Hyundai Accent, Nissan Versa, Kia Rio or Toyota Yaris. Chevy has the Aveo and Chrysler's least expensive car that might fit the profile is the PT Cruiser

Sen. Dianne Feinstein, D-Calif., who supported a plan with more stringent requirements to receive the vouchers, said she received "absolute assurance" from Senate leaders that if the program was continued beyond November it would be modeled after the bill she pushed.

Supporters said the program, which would be implemented by the Transportation Department, was expected to be implemented by early August.

The auto industry and its union lobbied heavily for passage of the cash for clunkers plan as GM and Chrysler have received billions of dollars in government-led bankruptcies and the entire auto industry has dealt with plummeting car sales. In May, overall sales were 34 percent lower than a year ago.

Under the proposal, car owners could get a voucher worth $3,500 if they traded in a vehicle getting 18 miles per gallon or less for one getting at least 22 mpg. The value of the voucher would grow to $4,500 if the mileage of the new car was 10 mpg higher than the old vehicle. The miles per gallon figures are listed on the car window's sticker.

Owners of sport utility vehicles, pickup trucks or minivans that get 18 mpg or less could receive a voucher for $3,500 if their new truck or SUV got at least 2 mpg higher than their old vehicle. The voucher would increase to $4,500 if the mileage of the new truck or SUV was at least 5 mpg higher than the older vehicle.

Dealers participating in the program would receive an electronic voucher from the government for the trade-in to apply to the purchase or lease of a qualifying vehicle. The bill directs dealers to ensure that the older vehicles are crushed or shredded to get the clunkers off the road.

The program was intended to help replace older vehicles -- built in model year 1984 or later -- and would not make financial sense for consumers owning an older car with a trade-in value greater than $3,500 or $4,500.

The U.S. industry is expected to generate about 9.5 million vehicles sales in 2009, compared with more than 13 million in 2008 and more than 16 million in 2007.

Associated Press writer Matthew Daly contributed to this report.

The bill is H.R. 2346.

Like most big ideas from this administration, details are sketchy and again the 4P are ignored by Congress. 4P is short for Proper Planning Prevents Problem. My first concern is what will happen to recycle parts market, since only the engine and tranny can be set aside to be reman. So will a body shop soon find a front clip of a fairly new vehicle is almost impossible to find. I know not all states require factory specs body parts are mandated on an insurance claim. Next what happened to requiring that proof of insurance on the junker be shown for a period of time for this program? Third, anyone figure what this will do the automotive leasing market. If I'm in business and often there's tax advantages of leasing a work vehicle and being able to spend capital elsewhere. Now my CPA might say it better to lay out capital for a down payment and go through the pain of a depreciation of the vehicle. Finally, while I've read that as of now, Honda will be the big winner; will UAW members still receive their generous discount and this taxpayers gift at the local dealership?

This sounds like something that the savvy shopper can take advantage of. Where can we see details of this proposal? What's to stop me from purchasing some 30yo clunker for $200 just to trade it in when I purchase a new car?

( Savings provision.--Nothing in subparagraph (A)
may be construed to preclude a person who dismantles or
disposes of the vehicle from--
(i) selling any parts of the disposed
vehicle other than the engine block and drive
train (unless the engine or drive train has
been crushed or shredded); or

I think you have to show that the car has been in registered in your name for at least a year. otherwise it would be a pretty hot deal

So I buy a clunker now, and wait a year before purchasing a new car. Right?

We had a 1986 Chevy Blazer... my DH just GAVE IT to his nephew 2 weeks ago!

I have a 1994 and 1998 Volvos, but neither meets the requirements for the MPG, so no go for me. I would have thought of upgrading under this program, but will not until they die now. It does suck that this is another program to reward those who did things wrong by buying low mileage SUV vehicles and are in a position to get free government money.

Yes, but how else could it work? If you want to reduce gasoline usage and pollution, don't you have to remove the highest usage and polluting vehicles?

Yes, but how else could it work? If you want to reduce gasoline usage and pollution, don't you have to remove the highest usage and polluting vehicles?

Reward the people that purchased fuel efficient vehicles by giving them a subsidy to purchase a new fuel efficient vehicle. For instance, I have a 2006 Pontiac Vibe that averages 28MPG (combined city/hwy). I wouldn't mind trading it in for a newer vehicle with similar fuel efficiency if I can get the trade in value + a gov't subsidy of a couple grand. The people with inefficient vehicles could trade them in to purchase the used fuel efficient vehicles + a subsidy for their clunker. I think they should be able to receive a subsidy if they purchased a new car, but not as much as if they purchased a used car.

I've driven small, fuel-efficient cars since I first got my license. And sure, I'd like my free handout as much as the next person, but I can't see how it would be effective as a government program to give me money to buy a new similar car. I get angry seeing the huge number of SUVs and Pickups and Van driven around with single people in them not even taking advantage of the extra space - I for one am happy to have the government pay some money to get those type of vehicles off the road. Makes it safer for me in my small car too.

First, some folks actually need a full size pick-up for either their profession or personal reasons. Most who I know work in the trades, in time, either buy a truck or a van. Like the station wagon, the mini-van has became the hauler for family, especially those with kids. Yes, I agree that SUV has become status symbol for some, except the typical upper middle class and wealther folks actually are wise in their vehicle purchases. Second, I grew up in an area where typically folks spent money (with pride) on a new or used Big 3 products with a few in time going with a foreign vehicles that was moderate priced. Now when I'm in my old hood there are countless who drive high ticketed price SUV and vehicles that I use to assume only doctors, CPA and other educated professions drove. Honestly, it use to the retire couple who were in their golden years that spent money on the new Lincoln or Caddy. I go to the Post Office to fetch my mail and constantly I see young women and men with their kids tooling around in a Navigator, Escalade or Mercedes SUV. Finally, since a poorly running computer controlled vehicle in time set a code and turn on the emission light, I say no more playing games. If the local part store clerk or garage tech scan the system and codes are produces than the info, along with V.I.N. goes to a state or federal agency. I would even say give the power to report an emission light on if a cop see it while giving some fool a speeding ticket. Heck if a car comes in for an oil change at Quiky-Lube and the light is burning; officials should know about it. After repairs, including a new scan, the polluter could bring in receipts, to the DMV or a similar agency and be cleared of the matter.

Excerpt:

Chrysler Group LLC said Wednesday it is offering $4,500 in cash toward the purchase of a new vehicle as it seeks to match a government incentive for people to trade in their old gas guzzlers.

The automaker said it will offer cash or zero percent financing for six years on most of its 2009 Chrysler, Dodge or Jeep models. The incentive begins Thursday and lasts through Aug. 31.

Add me to the list, no fair that I'm being punished for always buying fuel efficient cars. My old car croaked & I'm looking for a new one, really stinks that if I hadn't been so 'green' before, I'd save more green now.

We'll make a libertarian of you yet.

Chrysler to match ‘cash for clunkers’ incentive
Final rules of the government program are to be released on Friday

Chrysler Group LLC said Wednesday it is offering $4,500 in cash toward the purchase of a new vehicle as it seeks to match a government incentive for people to trade in their old gas guzzlers.

The automaker said it will offer cash or zero percent financing for six years on most of its 2009 Chrysler, Dodge or Jeep models. The incentive begins Thursday and lasts through Aug. 31.

Chrysler said in a statement that buyers are eligible for the new incentive even if they are not trading in a vehicle under the government's "cash for clunkers" legislation.

That program's final rules will be announced Friday. It offers vouchers to car shoppers who trade in their old, fuel-inefficient vehicles for a cleaner new vehicle.

Not all vehicles qualify under the legislation, however. Car shoppers get a voucher worth $3,500 if they trade in a vehicle getting 18 mpg or less for one getting at least 22 mpg. The voucher grows to $4,500 if the new car's mileage is 10 mpg higher than the old vehicle.

Owners of sport utility vehicles, pickup trucks or minivans getting 18 mpg or less could receive a voucher for $3,500 if their new truck or SUV got at least 2 mpg higher than their old vehicle. The voucher would increase to $4,500 if the mileage of the new truck or SUV was at least 5 mpg higher than the older vehicle.

That means some consumers could, in theory, get up to $9,000 off a new Chrysler vehicle if they trade in and buy the right combination of vehicles. According to the auto Web site Edmunds.com, 16 Chrysler vehicles are fuel efficient enough to qualify a shopper for a voucher under cash for clunkers, so long as the trade-in vehicle qualifies as well.

Chrysler emerged from Chapter 11 bankruptcy protection last month under new ownership and is now working to lure back car shoppers in a depressed market. Chrysler sales were down 46 percent for the first six months of the year.

Industrywide sales are down 35 percent.

EPA Tweaks Official MPGs Prior To Cash4Clunkers, Shafting Some
By Ben Popken, 4:09 PM on Mon Jul 27 2009,

Shazam! Your car magically gets more miles per gallon! That's what some consumers hoping to take advantage of the government's "Cash For Clunkers" program are discovering. And the result is that they suddenly no longer qualify for up to $4500 voucher.

Daniel Anderson's 1991 V6 Toyota Camry went up from 18 mpg to 19 mpg. Same for Jeff Chase and his 1989 Mazda 929, reports Jalopnik. Some time in the past week the FuelEconomy.gov fuel efficiency numbers increased for these cars, rendering their owners ineligible for the program that gives vouchers to drivers who trade in old gas guzzlers for more fuel efficient cars. Jalopnik spoke with several government spokespeoples and none of them had any idea that the change had happened.

Check out FuelEconomy.gov, and see if the government suddenly says you get more mpg and it just so happens to disqualify you from a Cash For Clunkers voucher.

Oh boy, seem like some dealers are covering the government side of the payment to complete a sale and now finding they are getting the run around from the Feds.

actually it sounds like the government warned dealers about doing presales based on this program. (If you're referring to the mpg changes that they made.) Dealers have only themselves to blame.

I still don't understand why the government made it retroactive in the first place. You knew dealers were going to make a mess of it.

Cash-for-clunkers auto eligibility list changed

As it prepared for its "cash-for-clunkers" program, the government rejiggered gas mileage figures on about 100 older vehicles last week in a way that changed whether they would be eligible for up to $4,500 in sales inducements.
The Environmental Protection Agency says the changes resulted from a double-check of its fuel-efficiency ratings on more than 30,000 1984 and newer vehicles in advance of the official start of the clunkers program Monday.


DRIVE ON: List of cars now ineligible for 'cash for clunkers'
OFFICIAL WORD: Government website on the program
SEND US YOUR PHOTO: We're searching for America's worst clunker

About half the 100 suddenly did not qualify because their combined mileage rating was revised upward; others unexpectedly got in.

"As a result of the review, roughly an equal number of vehicles became eligible as those found to be not eligible," said the EPA in a statement. "Eligibility for about 100 vehicles was affected."

Car-shopping website Edmunds.com said Monday that it discovered the switcheroo because potential buyers were complaining on its discussion boards.

Some said it made them ineligible at the last minute for car deals they already had on deck.

"We had everything lined up. We had a couple car dealers that had verified our car qualified, and we were ready to purchase a new car this weekend," wrote one potential buyer, identified on the site as John1152. "But it will not happen now because at the last second the EPA updated the information at their web page for a 1993 Toyota Camry wagon ... from 18 mpg to 19 mpg."

Karl Brauer, editor in chief of Edmunds.com, said, "It's unfortunate that consumers who had been researching and planning to trade in their vehicle ... are now left in the dust."

To qualify for the $1 billion program aimed at spurring auto sales and driving gas guzzlers off the road, the clunker must have an EPA city-highway "combined" rating of 18 miles per gallon or lower.

Buyers then get a $3,500 incentive if the new car gets 4 to 9 mpg more or $4,500 for 10 mpg or more. The new car also must itself have a minimum 22 mpg combined rating. The program ends Nov. 1, or when the $1 billion runs out.

EPA gave no reason its ratings were inaccurate or why some went up. For the 2008 model year, EPA started revising mileage figures, typically downward, to better reflect real-world driving. For example, a Toyota Prius that had been rated 60 mpg in city driving fell 20% to 48 mpg.

The head of the National Auto Dealers Association said on Thursday that he believes most of the $1 billion set aside for "cash for clunkers" incentives has already been used up, due to the surge in new-car sales in the first days of the program.

"We feel that we're much closer to exhausting that $1 billion than anyone thought," NADA President John McEleny said in a telephone interview. "We're not telling dealers what we should or shouldn't do but that we think the billion might be close to exhausted if not exhausted already."

Mr. McEleney said his conclusion is based on the results of an informal email poll of NADA members asking how many clunker deals they have already submitted to the National Highway Traffic Safety Administration, and how many others they have that are still to be processed.

Sources: Government to stop ‘cash for clunkers’
Officials worried $1 billion rebate program may quickly run out of money

The government plans to suspend its popular "cash for clunkers" program amid concerns it could quickly use up the $1 billion in rebates for new car purchases, congressional officials said Thursday.

The Transportation Department called lawmakers' offices to alert them to the decision to suspend the program at midnight Thursday. The program offers owners of old cars and trucks $3,500 or $4,500 toward a new, more fuel-efficient vehicle.

The congressional officials spoke on condition of anonymity because they were not authorized to speak publicly. Rae Tyson, a spokesman for the National Highway Traffic Safety Administration, which administers the program, declined comment.

Congress last month approved the Car Allowance Rebate System program, known as CARS, to boost auto sales and remove some inefficient cars and trucks from the roads. The program kicked off last Friday and was heavily publicized by car companies and auto dealers.

Through late Wednesday, 22,782 vehicles had been purchased through the program and nearly $96 million had been spent. But dealers raised concerns about large backlogs in the processing of the deals in the government system, prompting the suspension.

A survey of 2,000 dealers by the National Automobile Dealers Association found about 25,000 deals had not yet approved by NHTSA, or nearly 13 trades per store. It raised concerns that with about 23,000 dealers taking part in the program, auto dealers may already have surpassed the 250,000 vehicle sales funded by the $1 billion program.

"There's a significant backlog of 'cash for clunkers' deals that make us question how much funding is still available in the program," said Bailey Wood, a spokesman for the dealers association.

Even before the suspension, some in Congress were seeking more money for the auto sales stimulus. Rep. Candice Miller, R-Mich., wrote in a letter to House leaders on Wednesday requesting additional funding for the program.

"This is simply the most stimulative $1 billion the federal government has spent during the entire economic downturn," Miller said Thursday. "The federal government must come up with more money, immediately, to keep this program going."

Brendan Daly, a spokesman for House Speaker Nancy Pelosi, D-Calif., said they would work with "the congressional sponsors and the administration to quickly review the results of the initiative."

General Motors Co. spokesman Greg Martin said Thursday the automaker hopes "there's a will and way to keep the CARS program going a little bit longer."

Dealers had noticed earlier the program was proving to be more successful than they had anticipated, fueling concerns about massive backlogs. Some said cars were flying off the lot faster than they could keep them in stock, promising disappointment for buyers.

“In just one week, we’ve gone from having a full-stocked inventory to virtually nothing,” Casey Lindgren, sales manager at Corwin Chrysler-Dodge in Fargo, N.D., told area station KVLY. “This is a major surprise to all of us.”

The program was scheduled to run through Oct. 31.

The program was designed to spur vehicle sales while the auto industry is struggling with the effects of the economic downturn. U.S. auto sales are selling at a pace of about 10 million units per year, down sharply from a few years ago when they sold at the historic level of 15 million vehicles annually — the benchmark for more than a decade.

Some Clunker Deals Based on Old EPA Numbers Will be Honored

The U.S. Department of Transportation has ruled that deals involving Cash for Clunkers trade- ins based on old mileage numbers and consummated before July 24 will be honored, but deals consummated after July 24 on vehicles that became ineligible as clunkers due to mileage ratings changes will not be honored.

On the eve of launching the Car Allowance Rebate System (CARS) program, administered by the DOT, the Environmental Protection Agency (EPA) updated the critical combined fuel economy numbers that is a key determinant in whether a vehicle is a clunker or not. As a result, about 100 models changed status -- about half went from qualified to disqualified as clunkers; the other half became eligible as clunkers.

DOT spokesman Rae Tyson told Edmunds' AutoObserver.com Thursday that transactions involving clunkers that went from qualified to disqualified will be honored by the government if they were consummated before the July 24 program launch date. Transactions on vehicles that became ineligible as clunkers and consummated after July 24 will not be honored.

Vehicles that previously were not eligible as clunkers but became eligible with the EPA changes will be honored if the transactions were consummated after July 24.

Edmunds.com brought the glitch to the government's and public's attention after visitors to the car-shopping Web site and its various forums and message boards raised it. Some consumers reported to Edmunds that their vehicles qualified as a clunker on Thursday, but when they double-checked or were at the dealership, they discovered they no longer were eligible.

DOT spokesman Rae Tyson said he did not know how many transactions were involved.

Imagine this round on Jeopardy:

“Alex, I’ll take Government Programs for $400.“ Joe Consumer asks confidently

Alex Answers “The most disorganized government program ever thrown on cars dealers or consumers“

Joe hits the buzzer “What is the Car Allowance Rebate System – aka CARS“.

We Did The Math
We have been warning consumers to act quickly since funding would go fast. Many laughed and accused us of creating “a run on the bank” when we prediced funding would be gone by August 1st. Who is laughing now. No One.

We have been saying that the NHTSA’s dealer sales enter system was backed up. We told people that the NHTSA website continually boots car dealers off the site during the input process forcing them to start over. We reported that at best it takes 1.5 hours to enter a single transaction in the NHTSA sales system.

We said that from our survey over 60% of CARS sales have still not been booked. We pointed out that it would be impossible to “gauge” sales with a broken input system. (view dealer survey on 7/28) There are dealers representing thousands of sales that have yet to enter a car sale for approval.