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What Was Cash for Clunkers?

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author photo by Rob Nestora November 2009

Cash for Clunkers Considered a Success

Sure, no one really knew what to expect. But could anyone have guessed that "Cash for Clunkers," slated to run through November, would run its course in a little less than a month?

Dealers have until Monday, August 24 at 8 p.m. ET to file claims for any outstanding deals, meaning shoppers have even less time to take advantage of the generous refund vouchers worth $3,500 to $4,500 on their traded-in clunkers.

Many dealers had stopped making deals as early as Friday, so as not to risk giving out rebates and not be reimbursed by the government. Other dealers, however, are selling cars right up until the bitter end.

Despite its rocky start and long waits for reimbursements from the government, we're sure the nation's auto dealers are sad to see the $3 billion program end. As of Friday, dealers have made 489,269 sales worth $2 billion in rebates. The clunker program is single-handedly responsible for driving up showroom traffic to levels not seen in well over a year.

Many experts will be studying the environmental and economic impacts of the program for days and months to come, but from our perspective we're impressed.

The program helped tens of thousands of consumers get into a more fuel-efficient vehicle, which in turn provided a boost to the economy. Due to depleted inventory, automakers Ford and General Motors announced increases in their North American production, putting more people to work building more fuel-efficient vehicles.

"This program has been a lifeline to the automobile industry, jump starting a major sector of the economy and putting people back to work," Transportation Secretary Ray LaHood said. "At the same time, we've been able to take old, polluting cars off the road and help consumers purchase fuel-efficient vehicles."

And for that, we give "Cash for Clunkers" an A+.

The following is a list of the top-selling vehicles under the program and the most popular trade-ins, according to the Associated Press.

TOP SELLERS
1. Toyota Corolla
2. Honda Civic
3. Ford Focus front-wheel drive
4. Toyota Camry
5. Hyundai Elantra
6. Toyota Prius
7. Nissan Versa
8. Ford Escape front-wheel drive
9. Honda Fit
10. Honda CR-V four-wheel drive

TOP TRADE-INS
1. Ford Explorer four-wheel drive
2. Ford F-150 Pickup
3. Jeep Grand Cherokee
4. Jeep Cherokee
5. Ford Explorer two-wheel drive
6. Dodge Caravan/Grand Caravan two-wheel drive
7. Chevrolet Blazer four-wheel drive
8. Ford F-150 pickup four-wheel drive
9. Chevrolet C15000 pickup two-wheel drive
10 .Ford Windstar front-wheel drive van

Cash for Clunkers Overview

The Car Allowance Rebate System (CARS) was signed into law by President Obama on June 26. Under the CARS program, also called the "cash for clunkers" bill, your older car may qualify for a vehicle voucher worth thousands of dollars on a more fuel-efficient new car. The program began July 24 and runs until November 1, or until funds are no longer available.

Here are some answers to common questions about the CARS program. You can use the tools on AutoTrader.com to help you find the right high-MPG vehicle to make the most of the "cash for clunkers" law.

Q: What are the basic requirements to use a CARS voucher to purchase a new car?
A: Here is a quick look at some of the CARS requirements.

Your trade-in vehicle must

  • Be less than 25 years old on the trade-in date
  • Be in drivable condition
  • Have a combined city/highway fuel economy of 18 miles per gallon or less (using the EPA's new MPG figures) for passenger cars and small light-duty trucks. (Very large pickup trucks and cargo vans have different requirements)
  • Have been continuously insured and registered to the same owner for the full year preceding the trade-in
  • Have a "clear title" free of any liens or other encumbrances.

Your new American or foreign made vehicle must:

  • Be a new vehicle
  • Meet improved mileage requirements as specified for each type vehicle
  • Have a retail price no higher than $45,000
  • Be purchased or be leased for at least five years

Q: How much money will the new car vouchers be worth?
A: The plan offers vouchers of up to $4,500 when buyers trade older vehicles that have an official miles-per-gallon (MPG) figure from the Environmental Protection Agency (EPA) below a specific number (18 MPG for passenger cars and small light-duty trucks). The exact amount of mileage improvement required depends on the type of vehicle.

The four vehicle categories are passenger cars, small light-duty trucks, large light-duty trucks, and work trucks. Voucher amounts also vary based on the amount of improvement in miles per gallon between the older car and the new auto in each category. Greater improvements receive higher vehicle voucher amounts.

The National Highway Traffic Safety Administration (NHTSA) is managing the program. NHTSA has created CARS.gov to provide information about the program and the text of the law itself.

Summary of US House Cash for Clunkers Agreement of June 8, 2009
Passenger Car Light-Duty Truck Large Light-Duty Truck Work Truck
(8,500 a€“ 10,000 pounds)
Minimum Fuel Economy for New Vehicle 22 MPG
(EPA Combined) 18 MPG
(EPA Combined) 15 MPG
(EPA Combined)
$3,500 Voucher Mileage improvement of at least 4 MPG Mileage improvement of at least 2 MPG Mileage improvement of at least 1 MPG or trade-in of a work truck Trade-in must be at least pre-2002
$4,500 Voucher Mileage improvement of at least 10 MPG Mileage improvement of at least 5 MPG Mileage improvement of at least 2 MPG

Source: http://energycommerce.house.gov/Press_111/20090505/cashforclunkers.pdf

Q: How do I obtain a CARS voucher?
A: Individual buyers do not need to obtain a voucher. If your trade-in and new vehicles meet the CARS requirements, the registered participating dealer will reduce the price of your vehicle purchase or lease. Then the dealer will handle all the paperwork to request government reimbursement.

Q: How do I determine my current vehicle's miles per gallon (MPG)?
A: The plan uses the updated MPG vehicle ratings from the Environmental Protection Agency. You can check the official EPA MPG figure for your specific vehicle at fueleconomy.gov. On fueleconomy.gov, select your vehicle's model year, the make, and then the model. On the page for that vehicle, you'll notice a red bar with the words "Estimated New EPA MPG" in white letters. Below that, you'll see a red number with the word "Combined" beneath it. That number is the combined city/highway fuel economy for your vehicle for the CARS program. You can use the same process to see the combined MPG for a vehicle you are considering for purchase. The EPA ratings of some vehicles have recently changed, so do the research ahead of time so that you know your vehicle qualifies.

Q: Is "cash for clunkers" only for new cars, or can I buy a used car with this incentive?
A: The plan calls for exchanging a vehicle that is at least eight years old for a new car. Used car purchases are not covered.

Q: Can the CARS voucher apply to a purchase I've already made?
A: The voucher does not apply to purchases made before the program goes into effect.

Q: Do I get the voucher for my old car in addition to the trade-in value?
A: Since cars qualifying for the voucher will be scrapped, they qualify only for the voucher amount.

Q: Can the "cash for clunkers" voucher be combined with other special offers?
A: As long as the vehicle purchase meets the requirements of the plan, other special offers from the dealer or manufacturer or from other government programs are not excluded.

Q: Can I get the "cash for clunkers" incentive when buying from a private seller?
A: Since only new cars are eligible, you will not be able to use the incentive when you buy from a private seller.

Q: What are the goals of the "cash for clunkers" program?
A: Four objectives are commonly mentioned by sponsors:
1. Address environmental concerns by replacing older, less fuel-efficient vehicles with autos that get better miles per gallon and pollute less
2. Decrease demand for gasoline and, therefore, dependence on foreign oil
3. Encourage new-vehicle sales to invigorate the auto industry
4. Provide help for consumers who want to purchase a new vehicle

Q: What are the projected costs of the "cash for clunkers" bill?
A: Under the CARS legislation, funding could grow as much as $4 billion to support up to 1 million new car sales. The original $1 billion in funding was nearly depleted within one week of the program's launch on July 24. The House approved $2 billion in emergency funding on July 31.

This image is a stock photo and is not an exact representation of any vehicle offered for sale. Advertised vehicles of this model may have styling, trim levels, colors and optional equipment that differ from the stock photo.
What Was Cash for Clunkers? - Autotrader