(Source: NPR)

Pedal to the metal, Congress sent President Barack Obama legislation Thursday night with an additional $2 billion for “cash for clunkers,” the economy-boosting rebate program that caught the fancy of car buyers and instantly increased sales for an auto industry long mired in recession.

The Senate approved the money on a 60-37 vote after administration officials said an initial $1 billion had run out in only 10 days. The House voted last week to keep alive the program, which gives consumers up to $4,500 in federal subsidies if they trade in their cars for new, more energy-efficient models.

Without action, lawmakers risked a wave of voter discontent as they left the Capitol for a monthlong vacation.

Supporters of the program hailed its effect on the auto industry — which had its best month in nearly a year in July — as well as its claimed environmental benefits.

“The reality is this is a program that has been working. Consumers believe it’s working. Small-business people believe it’s working. People who make steel and aluminum and advertisers … and everyone who’s involved in the larger economic impact of the auto industry believe it is working,” said Sen. Debbie Stabenow (D-MI).

The legislation had its share of critics, though, most of them Republicans.

“What we’re doing is creating debt. … The bill to pay for those cars is going to come due on our children and grandchildren,” said Sen. Judd Gregg (R-NH).

Officials said the program’s initial $1 billion probably already has been spent, but a paperwork backlog prevented an accurate accounting. The additional $2 billion is enough to help consumers purchase a half-million more new cars, they added.

There was no suspense about the outcome in the Senate, where supporters of the legislation focused their energies on defeating all attempts at amending the measure. Passage of any changes would effectively scuttle “cash for clunkers,” they said, since the House has already begun a summer vacation and is not in session to vote on revisions.

An attempt by Sen. Tom Harkin (D-IA) to limit the program to lower and middle-income consumers was jettisoned on a vote of 65-32. Gregg’s call for Congress to offset the $2 billion with spending cuts elsewhere also failed, 51-46.

The Senate’s debate capped an unusually swift response by lawmakers, who were informed scarcely a week ago that the program was quickly running short of money.

Click here to read the entire article.

(Source: Economic Policy Institute)

Not even the most optimisitic American could have envisioned this soaring  popularity of “Car Allowance Rebate System” (CARS) — better known as “cash for clunkers.” CARS has proven to be very popular, and the $1 billion originally slated for credits appears to have been all but exhausted less than a week after the program went into effect. and is now awaiting another $2B lifeline, which is expected to come through after the Senate vote.

The program has already prompted thousands of Americans to upgrade older, less fuel efficient cars and is generating much-needed sales for troubled automobile manufacturers and related industries while decreasing gasoline consumption and improving environmental outcomes. But has there been an attempt to quantify these  impacts on fuel efficiency and environment? Yes.  The Economic Policy Insititute analyzes the fuel efficiency improvements & emissions reductions and made it easy for us to understand.  Here is a quick peek at the study & the awesome graphic that explains the cost savings in fueling a clunker vs. a new car.  The study methodology involves the following elements:

• Study authors assumed that the average credit is $4,000 and that all of the $1 billion is spent on credits, thus producing 250,000 trade-ins.
• The average miles driven per year — 14,450 — is the per vehicle estimate from the US Department of Transportation for 2006, the latest available data.
• Used forecasted annual gas price of $2.36/gallon from the Department of Energy.
• Derive CO2 emissions from the EPA and the Intergovernmental Panel on Climate Change, who assume that 1 gallon of automobile gasoline is equivalent to 19.4 pounds of CO2.
• 58% of all crude oil is from foreign sources and that 44% of all crude oil goes to gasoline production (both estimates from the Department of Energy for 2008).

Based on these assumptions, the study team has determined that the fuel economy improvements will save an estimated $821 per traded vehicle annually (see chart above).  How? Reduced gas consumption means less dependence on foreign oil, and more money in the pockets of consumers that could be used for domestic consumption. According to the Department of Transportation, the average fuel efficiency of old cars traded in via the program is 15.8 miles per gallon, while new cars had an average MPG of 25.4.

On average, total gas consumption will drop by 87 million gallons per year, and American consumers will use 22.2 million fewer barrels of foreign crude oil. The environmental impact of reduced gas consumption is considerable as well. We estimate that the program will result in about 850,000 fewer tons of CO2 emissions per year (3.4 tons per vehicle annually). This reduction equals more than two-thirds of the annual CO2 emissions linked to household electricity, heating, and waste.

Click here to read the entire article. (Hat tip @NPR)

(Source: Green Car Congress)

This post is sponsored by LemonFree.com

Buoyed by the US government’s CARS (“Cash for Clunkers”) program, US auto sales slowed their decline in the US in July, dropping on 12.1% to 997,824 units, accordingto summary figures from AutoData. Passenger car sales dropped 10.6% to 554, 527 units, while light truck sales dropped 14.1% to 443, 297 units. All comparisons are by volume. As a result, the SAAR for July surged to 11.24 million units; US SAAR had been below 10 million since January.

Hybrids had an especially good month, with reported sales jumping 31.8% year-on-year to 35,429 units, representing a 3.55% new vehicle sales market share for the month—the highest monthly share yet. Hybrid gains were largely due to an increase in Prius sales (up 29.7% to 19,173 units) and Ford hybrids (up 323% to 5,353 units).

According to the Alliance of Automobile Manufacturers, CARS sales reflected demand for more fuel-efficient vehicles:

• Ford reported a 9 mpg increase from trade-in vehicle to new vehicle purchase;
• GM reported a 54% increase in small car sales since the CARS program was launched;
• 57% of Mazdas sold so far under the program were fuel-efficient Mazda 3’s;
• 78% of Toyota’s CARS sales volume consists of Corolla, Prius, Camry, RAV 4 and Tacoma, which average a combined 30 mpg;
• Volkswagen reports more than 60% of its CARS sales are clean diesel Jetta TDIs which get an EPA combined 34 mpg.

Here is a quick snapshot of sales volume by manufacturer (in the hybrid category):

• GM delivered a total of 1,487 hybrid vehicles were delivered in the month, up 36.3% year-on-year.
• Ford’s fuel-efficient vehicles pace July sales results. Ford had an exceptionally strong month with hybrid sales, up 323% year-on-year to 5,353 units.
• Toyota Motor Sales (TMS) posted July sales of 24,295 hybrid vehicles, up 19.3% from the same period last year.
• Total sales of the fuel-efficient Honda Civic increased 3.1% to 30,037. Sales of the Civic Hybrid, however, plunged 71.8% to 969 units year-on-year. The new Honda Insight hybrid posted 2,295 units.
• Nissan sold 1,030 units of the Altima hybrid, up 44.1% year-on year.

Our friends at Jalopnik yesterday published a revised list of ten most purchased vehicles under the Cash for Clunkers program:

1. Ford Focus

2. Toyota Corolla

3. Honda Civic

4. Toyota Prius

5. Toyota Camry

6. Ford Escape FWD

7. Hyundai Elantra

8. Dodge Caliber

9. Honda Fit

10. Chevrolet Cobalt

Click here to read the entire report.

(Source: AP Via Yahoo & Time)

“Cash for clunkers” could have the same effect on global warming pollution as shutting down the entire country — every automobile, every factory, every power plant — for an hour per year. That could rise to three hours if the program is extended by Congress and remains as popular as it is now.

Climate experts aren’t impressed.

Compared to overall carbon dioxide emissions in the United States, the pollution savings from cash for clunkers do not noticeably move the fuel gauge. Environmental experts say the program — conceived primarily to stimulate the economy and jump-start the auto industry — is not an effective way to attack climate change.

“As a carbon dioxide policy, this is a terribly wasteful thing to do,” said Henry Jacoby, a professor of management and co-director of the Joint Program on the Science and Policy of Global Change at MIT. “The amount of carbon you are saving per federal expenditure is very, very small.”

Officials expect a quarter-million gas guzzlers will be junked under the original $1 billion set aside by Congress — money that is now all but exhausted.

Calculations by The Associated Press, using Department of Transportation figures, show that replacing those fuel hogs will reduce carbon dioxide emissions by just under 700,000 tons a year. While that may sound impressive, it’s nothing compared to what the U.S. spewed last year: nearly 6.4 billion tons (and that was down from previous years).

That means on average, every hour, America emits 728,000 tons of carbon dioxide. The total savings per year from cash for clunkers translates to about 57 minutes of America’s output of the chief greenhouse gas.

Likewise, America will be using nearly 72 million fewer gallons of gasoline a year because of the program, based on the first quarter-million vehicles replaced. U.S. drivers go through that amount of gas every 4 1/2 hours, according to the Department of Energy.

Time Magazine reports that initial data released by Department of Transportation, however, shows that so far cash for clunkers has been a green success. The clunkers averaged 15.8 m.p.g., compared with 25.4 m.p.g. for the new vehicles purchased, for an average fuel-economy increase of 61%. On the whole, American drivers are trading in inefficient trucks and SUVs for much more efficient passenger cars. Car manufacturers like Nissan are already retooling some models to improve their fuel economy so they can qualify for the credits. The early numbers were enough to convince California Senator Dianne Feinstein to go from criticizing cash for clunkers as too lax to supporting additional funding for the bill in the Senate. “This program has done much better than we ever thought it would for the environment,” she told reporters on Aug. 4.

It’s called the efficiency paradox: as we get more efficient at using energy — through less wasteful cars and appliances — the overall cost of energy goes down, but we respond by using more of it. In the case of cars, that means driving more. Ultimately our gas bill stays the same, but we spend more time on the road and pump the same amount of greenhouse-gas emissions into the atmosphere. The earth isn’t any better off.

To address the emissions problem directly, we need to look at fuel, not Fords: institute carbon taxes that raise the price of gas. We already know that higher gas prices discourage driving and reduce greenhouse-gas emissions — total vehicle miles traveled in the U.S. declined 3.6% in 2008 compared with the previous year, thanks largely to the sky-high price of gas for much of 2008. (The recession didn’t help, but sharp declines in driving began well before the bottom dropped out of the economy.) As gas prices have fallen in 2009, however, driving has begun to tick back up.

Click here to read the entire article.

(Source: Detroit News via Autoblog & Bloomberg)

The National Highway Traffic Safety Administration has processed 80,500 transactions so far, and the early winner of Cash For Clunkers appears to be the Ford Focus. The Detroit News is reporting that the Focus is the number one vehicle purchased under the government program, showing us why Ford’s C-Segment vehicle gained 43.6% in July. Ford also saw an amazing 97% increase in Escape sales in July, a tally that was likely improved with the help of Cash For Clunkers.

The controversial and somewhat clumsy program is drawing plenty of attention for its popularity amongst car buyers, and Detroit automakers appear to be taking more than their fair share of sales.

The White House says 47% of all vehicles sold through the bill so far come from US automakers; 2% higher than the domestics’ 45% overall share. Four of the top 10 vehicles purchased under the program come from domestic automakers, and over half of all vehicles were built in the States.

This wildly popular program is currently all but spent and is awaiting the Senate nod for a further $2Billion cash infusion to keep it going.   On Friday, the House approved the $2 billion increase. The Senate is expected to vote Wednesday or Thursday; the White House is pressing it to act. Transportation Secretary Ray LaHood told MSNBC that the program has been a “lifeline to the economy.”

To drum up support for more dollars, the White House is touting the program’s value. White House spokesman Robert Gibbs says the average fuel economy increase so far is 9.4 mpg; a 61% increase verses the vehicles destined for a sodium silicate bath. So far, 83% of the vehicles traded in have been trucks, while 60% of the vehicles purchased under the program have been cars. The White House estimates that Cash For Clunkers will save the average car buyer $700 – $1,000 in gas prices during the life of the vehicle.

The sales last month from the federal incentives may result in fewer buyers later this year after the program ends, George Pipas, Ford’s sales analyst, told CNBC today.

A similar program in Germany won’t sustain sales growth into 2010 as those incentives expire, said Matthias Wissmann, president of the German carmakers, today at a Frankfurt news conference. Germany’s car market expanded by 26 percent from a year earlier in the first half, propelled by increases of at least 40 percent in May and June.

Our favorite auto website,  Jalopnik, offers a comprehensive list of the top 10 vehicles  sold and trade-ins) dealt under this CARS program.

The Ten Most Traded-In Vehicles (vehicle’s EPA mileage)
1. 1998 Ford Explorer (14-17 mpg)
2. 1997 Ford Explorer (14-18 mpg)
3. 1996 Ford Explorer (14-18 mpg)
4. 1999 Ford Explorer (14-18 mpg)
5. Jeep Grand Cherokee
6. Jeep Cherokee
7. 1995 Ford Explorer (15-18 mpg)
8. 1994 Ford Explorer (15-18 mpg)
9. 1997 Ford Windstar (18 mpg)
10. 1999 Dodge Caravan (16-18 mpg)

The Ten Most Purchased Vehicles (vehicle’s EPA mileage)
1. Ford Focus (27-28 mpg)
2. Honda Civic (24-42 mpg)
3. Toyota Corolla (25-30 mpg)
4. Toyota Prius (46 mpg)
5. Ford Escape (20-32 mpg)
6. Toyota Camry (23-34 mpg)
7. Dodge Caliber (22-27 mpg)
8. Hyundai Elantra (26-28 mpg)
9. Honda Fit (29-31 mpg)
10. Chevy Cobalt (25-30 mpg

Click here to read the entire article.

(Source: Bloomberg)

The future of the U.S. “cash for clunkers” program depends on the Senate backing a $2 billion infusion this week, with at least one Republican saying he was going to try to block the effort.

“We’ve got to slow this thing down,” Senator Jim DeMint, a South Carolina Republican, said on “Fox News Sunday.”

The House voted 316-109 on July 31 for an emergency measure adding $2 billion to the program aimed at reviving U.S. auto sales, after a burst of demand exhausted most of the initial $1 billion in less than a week.

Transportation Secretary Ray LaHood said in a C-SPAN interview Sunday he expects the current $1 billion in funding to be gone by the end of the weekend. The administration will continue the program until the Senate acts, and dealers will be reimbursed for deals in the pipeline, he said. The government will make a “good-faith effort” for transactions beginning tomorrow, he said.

DeMint said he opposes the program because “we’re helping auto dealers while there are thousands of other small businesses that aren’t getting help.”

Named the Car Allowance Rebate System, the program provides credits of as much as $4,500 for the purchase of a new car when turning in an older vehicle to be scrapped. Lawmakers had expected the first $1 billion to generate about 250,000 vehicle sales and last until about Nov. 1.

(Source: AP via Yahoo; Freep & Photo Courtesy: TOBY TALBOT/Associated Press via Free)

The Obama administration promised on Friday that the financially strapped “cash for clunkers” program will be good at least through the day.

Less than four days after launching a popular cash-for-clunkers program, the Obama administration warned Congress the plan already had burned through its $950-million budget, setting off a rush for more money while leaving thousands of dealers and consumers in the lurch.

A White House official told the Free Press late Thursday that all valid deals made under the program so far would be honored, saying it had not been suspended. But administration sources could not say what car buyers hoping to trade their clunker for a new vehicle should do today.

The House is set to adjourn today for a monthlong recess, but Michigan lawmakers and administration officials were pushing for an emergency infusion of cash today. A spokesman for House Speaker Nancy Pelosi said any request would be “quickly reviewed.”

Sen. Carl Levin, D-Mich., said he got the word from Transportation Secretary Ray LaHood as members of the Ohio and Michigancongressional delegations huddled on Capitol Hill to discuss ways to keep the popular program going.

“Beyond Friday,” Levin said, “depends on whether the administration can find some money.”

One participant in the meeting said they were examining possible funding sources and whether there were any glitches in the computer system. The participant, who spoke on condition of anonymity because of the sensitivity of the talk, said they were also studying how many dealers had enrolled in the system.

Through Wednesday afternoon, more than 23,000 dealer franchises were participating, according to the National Highway Traffic Safety Administration.

The administration dispatched Brian Deese, a top adviser to the Treasury’s auto task force, to the Hill meeting.

Sen. Debbie Stabenow, D-Mich., said about 40,000 new vehicles had been purchased through the program but dealers estimate another 200,000 vehicles have been sold in transactions that have not yet been completed through the program.

Earl Stewart, who owns a Toyota dealership in North Palm Beach, Fla., said the changing messages on the program has created confusion among his customers and his staff. Stewart’s accounting department also could only enter about a dozen of the 47 sales he made into the government Web site set up to handle the transactions, leaving him wondering if he will get refunded for the remaining vouchers.

Click here to read the entire article.

Breaking News Update:

The Detroit Free Press reports that the U.S. House will vote on $2 billion in additional funding for the cash-for-clunkers program this afternoon.

Michigan lawmakers huddled in the Capitol this morning with a White House official discussing ways to get the cash-for-clunkers program under control. The program is still under way, they said.

While the Obama administration said the plan was not suspended, it doesn’t know how many deals have been made under the program and whether the $950 million available to the plan is enough to cover the deals already made.

The administration may consider whether money from the economic stimulus plan can be diverted to the program.

Click here to read the  update.

(Source: Jalopnik)

Now that the President has signed the “Cash For Clunkers” into a bill, a lot of you may be thinking hard about trading your old meta for a shiny new one.  Through various articles Transportgooru has already discussed in great lengths about the details associated with the Cash for Clunkers, including the eligibility criteria for trading your old vehicle.

To add to that, our good friends at Jalopnik have put together this awesome list (see below), which I think is a must read for anyone who is contemplating a trade under Cash for Clunkers program.  Here is the list in reverse order.

5.) Buy A Clunker Now!

Some unscrupulous sellers may try and convince you to buy a clunker for a few hundred dollars with the promise of being able to trade it in for a $4,500 voucher. In reality, if you haven’t owned your car and kept it running and insured for a year you’re not eligible. Don’t buy a beater unless you want to keep it for a while.

4.) Trade In Your Car Early! –

We’ve read reports on forums of people already taking advantage of the Cash for Clunkers bill. In reality, they’re being taken advantage of. The law has been signed, but the National Highway Transportation Safety Administration hasn’t finalized the rules. It probably won’t go into affect until after July 24th. If you are being offered a “voucher” on your clunker you’re really just getting money for your trade-in, which the dealer can then resell. The most you lose is your car, but the dealer could face a fine of up to $15,000.

3.) Scrap A Car Worth More Than The Voucher

The used car market isn’t great right now, but this doesn’t mean your vehicle doesn’t have some value. Make sure to check the value of your car using a resource like KBB before trading in an older car that, it turns out, is worth more than $4,500 or $3,500 on the open market. Dealers have a greater incentive to sell you a new car and scrap your old one than to get the value of your trade-in “clunker.”

2.) Get Denied For Other Discounts

The voucher program is not designed to be a stand-alone discount program, meaning you’re still eligible for whatever other discounts automakers are offering (and there are a lot of those). With 0% financing and thousands cash back you’re getting cheated if you just get the value of your trade-in off a new car. The average incentive, according to Edmunds, was $2,930 for June. So you could possibly get $4,500 + $3,000 off of a new car.

1.) Avoid Moving Up To A More Profitable Class

If you own a truck or SUV you can use your voucher to trade it in for a car and, likely, get a larger voucher. Many dealerships will want to put you into a new truck because they’re more expensive than most cars, but if you don’t need a truck you can trade your old one in and find an inexpensive car with 10 MPG better fuel economy, which qualifies you for $4,500. For example, if you’ve got a 1991 V6 Ford F-150 you can trade it in for a $15,000 2009 Ford Focus for your kid and get the full $4,500 off, instead of paying upwards of $20,000 for a new truck and only getting a $3,500 voucher.