(Sources contributing to this hybrid report: Green Car Congress; Fast Lane – Sec. LaHood’s Blog; Autoblog; Detroit News; LA Times; Business Week)

Finally, the curtains came down on the Cash For Clunkers program on Monday @8PM.  After much hype and chaos the program closed its doors with a mixed record.  Secretary LaHood calls is a great success while some others say no pointing to the choas around the program’s final days when the computer systems crashed as the dealers tried to submit their transcation data for reimbursements. In anycase, the program has left a wonderful memory in the minds of many economists and possibly underlined the fact that indeed the Government has some clever tricks up the sleeves to stimulate a lagging economy, especially for the automakers whose future looked very gloomy before this program came in to place.

After one month, an extra $2 billion in funding and an absolute mess of paperwork, Cash for Clunkers has finally petered out. The final numbers are in and the program resulted in 700,000 sales totaling $2.877 billion in $3,500 and $4,500 vouchers handed out at dealerships across the nation. An additional $100 million was set aside for administration costs, or about $144 for every claim processed, leaving $23 million in the kitty.

The program offered consumers rebates of $3,500 or $4,500 off the price of a new vehicle in return for trading in their older, less fuel-efficient vehicles to be scrapped. The trade-in vehicles needed to get 18 miles per gallon or less.

Here are some interesting snippets collected from various sources around the web (thank me for making it easy for you).

• The US Cash for Clunkers program (CARS) ended Tuesday night with 690,114 dealer transaction submitted worth $2,877.9 million.
• Eighty-four percent of consumers traded in trucks and 59% purchased passenger cars.
• The average fuel economy of the vehicles traded in was 15.8 mpg and the average fuel economy of vehicles purchased is 24.9 mpg: a 58% improvement.
• Cars purchased under the program are, on average, 19% above the average fuel economy of all new cars currently available.

Image Courtesy: Green Car Congress

Green Car Congress notes that Toyota reaped the largest percentage of sales under the CARS program (19.4%), followed by GM (17.6%) and Ford (14.4%). Honda came in fourth at 13.0%.

The top 10 vehicles purchased under the program were:

1. Toyota Corolla
2. Honda Civic
3. Toyota Camry
4. Ford Focus FWD
5. Hyundai Elantra
6. Nissan Versa
7. Toyota Prius
8. Honda Accord
9. Honda Fit
10. Ford Escape FWD

Top 10 Trade-in Vehicles:

1. Ford Explorer 4WD
2. Ford F150 Pickup 2WD
3. Jeep Grand Cherokee 4WD
4. Ford Explorer 2WD
5. Dodge Caravan/Grand Caravan 2WD
6. Jeep Cherokee 4WD
7. Chevrolet Blazer 4WD
8. Chevrolet C1500 Pickup 2WD
9. Ford F150 Pickup 4WD
10. Ford Windstar FWD Van

David Kiley at Business Week says that the annualized selling rate for the auto industry in August is expected to be about 15.5 million, thanks to C4C, according to Wall Street firm Goldman Sachs. That would be a 16% improvement year over year, and nearly a 40% increase from July.  Goldman fully expects a “pay back effect” in September following the program. The firm also expects the monthly selling rate to remain above 10 million for the rest of the year, with a final sales tally of about 10.5 million, with a tally of 12 million next year. Some other analysts have pegged next year’s selling rate at 12.5 million to 13 million.

David also observed that while the program did its job, its real contribution has been less than the hype. Cash for clunkers did spur sales. It sold 690,000 cars and many were compacts like the Ford Focus and Honda Civic. So it did accomplish the mission of scrapping some old iron and selling some more efficient cars. That said, the boost will amount to less than a 3% increase for the year. That’s hardly the windfall that Germany achieved from a similar program, which pushed sales up an average of 30% a month since March. There may also be a hangover in car sales in the U.S. Edmunds says that purchase intent is now down 11% from June, meaning that fewer people are looking at new cars. So sales could slump in the coming months. In fact, J.D. Power says that more than 70% of sales may have happened later this year even if the government hadn’t spent $3 billion on the clunker program. One other point: Toyota was the biggest beneficiary, getting 19.4% of sales, with General Motors getting 17.6% and Ford getting 14.4% of sales from the program.

David Kiley says that “Clunkers” was good policy for a number of reasons (all of which I agree wholeheartedly):

1. There is no question that the program brought many car buyers off the sidelines, and gave automakers, and dealers, a shot in the arm not only in terms of sales of the vehicles that qualified, but in vehicle sales in general as the program brought lots of new eyeballs to the entire showroom, not just the models that qualified.
2. The $3 billion had direct impact on the economy, keeping people working, increasing production and shift work at auto companies and parts makers. Unlike other pieces of economic stimulus, the money was allocated and went directly into the economy. The money isn’t sitting on a shelf waiting for building permits to make it through local bureaucracies.
3. Clunkers put a spotlight on the whole idea of trading up in fuel economy. Lots of old Explorers got swapped for Ford Focuses and Toyota Corollas. I believe U.S. public policy must move toward engineering a substantial change in transportation. There needs to be more policy that persuades people to choose their vehicles in a smarter way, to leave a smaller carbon imprint. This Clunkers bill was, perhaps, a start of a recurring series of moves that will create a more fertile atmosphere and public discussion about this.
4. Perhaps the undeniable efficiency of Clunkers will influence policy-makers and lawmakers the next time they draft a stimulus package. Economist Martin Feldstein warned us when the stimulus was being debated that it was not targeted nearly enough to consumer spending. His notion, which I agreed with, was that money should have been highly targeted to spending on specific high-impact sectors—cars, major appliances, home improvement.

The USDOT’s press realease observed that according to a preliminary analysis by the White House Council of Economic Advisers, the CARS program will (1) Boost economic growth in the third quarter of 2009 by 0.3-0.4 percentage points at an annual rate thanks to increased auto sales in July and August. (2) Will sustain the increase in GDP in the fourth quarter because of increased auto production to replace depleted inventories. (3) Will create or save 42,000 jobs in the second half of 2009. Those jobs are expected to remain well after the program’s close.

Sec. LaHood says “This is a win for the economy, a win for the environment and a win for American consumers”.  He noted in his blog “CARS’ economic success has been some of the most heartening news. Both Ford and General Motors haveannounced production increases for their third and fourth quarters due to heightened demand for fuel-efficient vehicles. Honda is also increasing production at its U.S. plants in East Liberty and Marysville, Ohio and in Lincoln, Alabama.  The program has been a lifeline to auto manufacturers and dealers to be sure. But it’s also had a visible ripple effect through communities and related industries. Because of CARS, scrapyards are selling clunker waterpumps, batteries and other parts. Credit unions and banks are processing thousands of car loans. Repairmen, mechanics and sales staff are picking up additional work. CARS has truly been a winning deal for everyone. ”   The USDOT’s press release also offered the following statistics:

Vehicles Purchased by Category

• Passenger Cars: 404,046
• Category 1 Truck: 231,651
• Category 2 Truck: 46,836
• Category 3 Truck: 2,408

Vehicle Trade-in by Category

• Passenger Cars: 109,380
• Category 1 Truck: 450,778
• Category 2 Truck: 116,909
• Category 3 Truck: 8,134

84% of trade-ins under the program are trucks, and 59% of new vehicles purchased are cars. The program worked far better than anyone anticipated at moving consumers out of old, dirty trucks and SUVs and into new more fuel-efficient cars.

Average Fuel Economy

• New vehicles Mileage: 24.9 MPG
• Trade-in Mileage: 15.8 MPG
• Overall increase: 9.2 MPG, or a 58% improvement

Cars purchased under the program are, on average, 19% above the average fuel economy of all new cars currently available, and 59% above the average fuel economy of cars that were traded in. This means the program raised the average fuel economy of the fleet, while getting the dirtiest and most polluting vehicles off the road.

Image Courtesy: Green Car Congress

Industry experts are now saying that after the ‘party’ of the Cash for Clunkers scheme, the auto industry will now experience a ‘hangover’, with a large drop in sales due to the lack of incentives. Auto research firm Edmunds.com predicted Wednesday that the industry “is likely to experience a painful hangover” after the monthlong cash-for-clunkers party. “People rushed into purchases that many would otherwise have made later this year. The result will be lower sales in the weeks to come,” said Edmunds Chief Executive Jeremy Anwyl.  The number of people who intend to buy a new car in the next two months was down 50% from the peak of the clunkers program and 11% from the average in June, the firm said.

Figures released Wednesday showed that California auto dealers requested the most in reimbursements, $326.8 million, followed by those in Texas, New York and Illinois.  Timely payment to dealers, some of whom are owed more than $3 million, will be a key measure of the program’s effectiveness, industry spokesman Wood said.  Michigan ended up with $132.4 million in vouchers sought under the cash for clunkers program, the eighth highest among states. California was first at $327 million followed by Texas, New York, Florida Illinois, Pennsylvania and Ohio.

Contributing Sources: CNN Money; Jalopnik ; LA Times & Autoblog Green)

This post is sponsored by LemonFree.com

Finito!  Finished! Over! Gone! Done! End of the Road! Swan Song!  Whatever the buzz word you would like to use for marking the end of the “successful” Cash for Clunkers Program, please feel free to do so.  Many buyers made it out of the dealers with a sigh of relief while many dealers are still left wringing their hands over the delays in the Government’s administrative machine that processes the vouchers.

Amdist all this madness and hype surrounding the C4C,  for many of us in the transportation business might take a couple of days (or even weeks) to understand the full impact of the program’s final days.  Hopefully it is all good.  In the meanwhile,  TransportGooru went looking for the statistics on how the programs as well as the vehicles tallied up so far and found it for you from the reliable sources in our Automotive web reporting sphere (including Autoblog, Jalopnik, etc).

The ever popular Website, Jalopnik reports that as of Friday morning the number of transactions submitted numbered 489,269 with a dollar value of $2.04 billion. This morning the number reached 635,186 transactions with a dollar value of $2.65 million.  So far (as of 7:47 AM August 24, 2009) the number of vehicles purchased have overwhelmingly been passenger cars (283,104) and category 1 trucks (166,686), with just a few category 2 (31,862) and category 3 (1,300) trucks. On the other end, the majority of vehicles turned in are category 1 trucks (318,249) and category 2 trucks (81,599) with just 78,265 passenger cars. Was there a surge of sales over the weekend? How successful has the program been?  Once the deadline has passed, it’ll be interesting to see where the final MPG improvements and rankings of purchased and clunked cars end up. Shouldn’t have to wait long.

It would be hard to have a popular program without any drama, right?  The New York Times reports that auto dealers swimming in applications for the “Cash for Clunkers” program now have a little extra time to fill out those forms.   The Web site that dealers use to submit rebate applications crashed this afternoon, the Department of Transportation said. As a result, dealers can file for rebates until noon on Tuesday, though the deadline for sales is still 8 p.m. Monday. Car shoppers flooded sales lots this weekend after the announcement Thursday that the program was ending.

The Transportation Department said that despite a large increase in the system’s capacity, the website was down temporarily Monday. By then, dealers had submitted 625,000 applications worth more than $2.5 billion.

The department’s website, which has had problems throughout the program’s short life, was down for at least six hours Monday amid a last-minute rush to submit rebate applications, said Bailey Wood, a spokesman for the National Automobile Dealers Assn.

Glitches aside, Transportation Secretary Ray LaHood spent Monday taking a victory lap.   “This program has been a lifeline to dealers,” Mr. LaHood said in Norristown, Pa. “It’s been a lifeline to the scrapyards who are getting these cars and can sell water pumps, and batteries and other parts. It’s also been a lifeline to the credit unions and banks processing all these loans. It’s been a win-win-win all around.”

AutoNation (AN, Fortune 500), the country’s largest dealership chain, stopped doing Cash for Clunker transactions after Friday. AutoNation had completed over 12,000 deals, according to spokesman Mark Cannon.

“It’s been a great run,” Cannon said.

Under Clunkers, which launched July 27, vehicles purchased after July 1 are eligible for refund vouchers worth $3,500 to $4,500 on traded-in cars with a fuel economy rating of 18 miles per gallon or less.

here is an updated list of traded-in and purchased cars  (curtesy of our friends at Jalopnik).

Top 10 New Vehicles Purchased

1. Toyota Corolla
2. Honda Civic
3. Ford Focus FWD
4. Toyota Camry
5. Hyundai Elantra
6. Toyota Prius
7. Nissan Versa
8. Ford Escape FWD
9. Honda Fit
10. Honda CR-V 4WD

Top 10 Trade-In Vehicles
1. Ford Explorer 4WD
2. Ford F150 Pickup 2WD
3. Jeep Grand Cherokee 4WD
4. Jeep Cherokee 4WD
5. Ford Explorer 2WD
6. Dodge Caravan/Grand Caravan 2WD
7. Chevrolet Blazer 4WD
8. Ford F150 Pickup 4WD
9. Chevrolet C1500 Pickup 2WD
10. Ford Windstar FWD Van

This list is subject to change as the final numbers come in.  So stay tuned for further updates.

(Source: AP via Yahoo & New York Times)

The Senate will vote to extend the popular “cash-for-clunkers” program before going home on Friday, Majority Leader Harry Reid declared Tuesday in a strong signal the government won’t let the trade-in rebates die under the surging demand that has almost exhausted federal backing.

Images via Apture

Reid’s GOP counterpart, Mitch McConnell of Kentucky, predicted his party would not block a vote and “the matter will be completed.” Republicans were still demanding a chance to amend a House-passed version that would extend the program into September, but Democrats were confident the bill wouldn’t be changed.

“There obviously is a real pent-up demand in America,” the Transportation secretary, Ray LaHood, said. “People love to buy cars, and we’ve given them the incentive to do that. I think the last thing that any politician wants to do is cut off the opportunity for somebody who’s going to be able to get a rebate from the government to buy a new automobile.”

Visiting the White House for a lunch with the President, Harry Reid, the Senate majority leader, was also asked about the program.

“We’ll pass ‘cash for clunkers,’ ” he said. And Mitch McConnell, Republican of Kentucky, who is the minority leader, said there would be a vote, but he did not suggest an outcome.  Opposition to extending the program has been dissipating. One vocal GOP critic, South Carolina Sen. Jim DeMint, said Tuesday he would not try to block the legislation. And three lawmakers who wanted the program limited to the purchase of even more fuel-efficient vehicles said Monday they would back the plan.

Republicans have said it puts the government in the bad position of picking winners and losers.

“People want to know what’s going to be next. Cash for shoes? Cash for groceries?” said Sen. Richard Shelby, R-Ala.

The first $1 billion in funding is expected to lead to sales of 250,000 vehicles and the additional $2 billion would generate sales of perhaps a half-million more vehicles.  The program has encouraged about a quarter-million Americans to buy new cars at time when the economy is still in recession and badly needs a boost.

Buyers of new cars and trucks have swamped formerly deserted auto dealers to claim their rebates — up to $4,500 when they trade in older models that get significantly worse gas mileage. The older vehicles are then scrapped.

Because the House has already recessed for August, any change by the Senate would effectively interrupt the rebate program until Congress returns in September. Consumers who don’t get in on a deal this week would have to wait until then to take advantage of the rebates, assuming eventual passage.

Click here to read the entire article.

(Source: Jalopnik)

Image Courtesy: 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.

(Source: New York Times – Wheels Blog, Sec.  LaHood’s Fast Lane Blog, U.S. News and World Report)

First of all, it’s no longer Cash-for-Clunkers. The program is now called the Car Allowance Rebate System (C.A.R.S.).  The program, which President Obama signed into law on Thursday, pays consumers up to $4,500 in credit for trading in their cars or trucks for those that are more fuel efficient. The law allocates $1 billion for the program.

The incentive program begins within 30 days of today’s bill signing by the President. The final day for an eligible purchase or lease is November 1, 2009, or when DOT exhausts the funds set aside for the program, whichever occurs first. The credit is not retroactive prior to the start of the program and cannot be applied toward the purchase of used vehicles.

Of course, there are plenty of regulations to determine what vehicles qualify for the credit. The National Highway Traffic Safety Administration, which is overseeing the program, has put together this Web site to help consumers who would like to participate in the program.

Image Courtesy: USDOT Secretary Ray LaHood's Fast Lane Blog

Today, the Transportation Secretary Ray LaHood wrote on his blog: “This program helps consumers pay for new, more fuel-efficient vehicles when they trade in less fuel-efficient cars or trucks. Stimulating the automobile industry while improving the environment and reducing fuel consumption–these are outcomes the DOT is pleased to support.

Congress and the Obama Administration recognize this is an important time for the automobile industry. And, the CARS program will help boost car and truck sales. Moreover, since the auto industry has improved vehicle safety and reduced vehicle emissions over the years, we are also excited about a program that puts vehicles on the road that are safer, pollute less, and get more miles to the gallon than the vehicles they replace.

CARS will be implemented by DOT’s National Highway Traffic Safety Administration (NHTSA). It’s a new responsibility this department welcomes; I know the folks in NHTSA stand ready to fulfill their new charge.  I encourage everyone to learn more about the program from the website, www.cars.gov, or call NHTSA’s Auto Hotline at 1-888-DASH-2-DOT (1-888-327-4236). ”

The C.A.R.S. rebate does not count on top of the trade-in value of your vehicle. In the F.A.Q. section of CARS.gov: “The law requires your trade-in vehicle to be destroyed. Therefore, the value you negotiate with the dealer for your trade-in vehicle is not likely to exceed its scrap value.”

An Important FYI item: N.H.T.S.A. warns consumers of unofficial C.A.R.S. Web sites that are now popping up, reports USA Today. “Some want a lot of personal information, and talk about consumers being able to pre-register,” said Eric Bolton, a N.H.T.S.A. spokesman. “Consumers don’t have to register for this program at all.”

For those of you who are contemplating the purchase of a new vehicle under this program, here is a wonderful guide put together by the U.S. News and World Report:

10 Things You Should Know About Cash for Clunkers Car Allowance Rebate System”

1. What’s the official definition of a clunker? A driveable car made within the last 25 years, with a fuel economy rating of no more than 18 mpg. To learn more about the combined city/highway fuel-economy of your car, check out the Car Allowance Rebate System site.

2. Here’s how the program works: you trade in your old car for cash towards the purchase of a new, more efficient one. The better the mileage of the new car , the more money you’ll get towards its purchase – either $3,500 or $4,500. Check out Jalponik’s handy chart to figure out how much you might be able to claim.  The minimum combined fuel economy of a new car purchased under the program must be at least 22 mpg, while new small trucks and SUVs have to get at least 18 mpg, and large trucks have to get 15 mpg. The old cars will be salvaged once they’re turned in.

3. Consumers should act fast. The bill provides vouchers for one million purchases, and the window of time is only fron July 1 to November 1. The bill will be revisited in the fall , and some changes may be made at that time.

4. The program will cost $4 billion. Funds will come from TARP.

5. Sorry, would-be entrepreneurs: it’s off-limits to buy an old car and “flip” it for the program – the car must have been insured by the same owner for at least one year before the trade.

6. The environmental idea behind the bill is that it takes old, inefficient vehicles off of the road. But some environmentalists are actually opposed to the bill because it takes functioning cars off of the road before their time is up, and does not permit the vouchers to go towards used vehicles, even if they are more fuel-efficient. Sen. Dianne Feinstein, who sponsored an alternate bill stated that the current version undermines fuel efficiency standards and provides “handouts for Hummers.” On the other hand, some argue that higher fuel standards would disproportionately benefit foreign cars, denying American automakers their much-needed boost.

7. The economic incentive of the bill is to jump-start drowsy auto sales. According to Bloomberg, similar programs worldwide have raised auto sales 25 percent to 40 percent in Germany, 15 percent in China and 8 percent in France.

8. Even if it’s not designed entirely the way environmentalists had hoped, there are still green benefits. Says Treehugger: “One positive effect the bill could have, though, is simply to further advance the presence of ‘fuel efficiency’ as a reward term in the skeptical American consumer market. Yes, hybrids continue to sell, but not to 99 percent of the population. The bill could, albeit in a relatively minor way, serve to advance an attitude that places importance on fuel efficiency in the future.”

9. Cash for Clunkers is expected to have a great impact on the Hispanic community. That’s why the program is getting a celebrity endorsement from Dancing With The Stars’ Cristian de la Fuente and Ugly Betty’s Angelica Vale.

10. As always, buyer beware. It doesn’t make sense to trade in your vehicle unless its value is less than or equal to what you’d get in the program. Edmunds has identified a list of cars that are guaranteed to be worth less than the value of the voucher. You can find it here (PDF). Said ABC News Consumer Correspondent Elisabeth Leamy, “From a strictly consumer standpoint, the Cash for Clunkers program is not a great deal. Yes, if you are bent on buying brand new, you will save money. But the savings are nothing compared with how well you can do by buying a used car.”

(Source: Autoblog, Washington Post,  Detroit Free Press, AFP via Google)

Image Courtesy: Jalopnik

Clears Senate

After narrowly surviving an attempt by Sen. Judd Gregg, R-N.H. to strip it from a war-spending bill, the Cash for Clunkers program passed the Senate yesterday evening. Well, the $106 billion war-spending bill passed the Senate on a 91-5 vote, but the $1 billion scrapping program earlier survived Sen. Gregg’s attempt to have it removed and thus passed, as well. Now the bill makes its way to President Obama, who is expected to sign the bill into law, after which the U.S. Transportation Department reportedly has one month to figure out how the Cash for Clunkers program will be run. Since Congress reduced funding for the program from $4 billion to just $1 billion, it’s expected that the money will run out long before the program is scheduled to end on November 1.

“We are gratified that the Congress delivered on this administration priority, and President Obama looks forward to signing it into law,” according to an administration statement.

Details, Details, Details,

Vehicles purchased after July 1 will be eligible for the refund vouchers worth as much as $4,500 to turn in gas guzzlers and buy new cars that are more fuel efficient.

The agency in charge of administering the program, the National Highway Traffic Safety Administration, will work out all the details within 30 days of enactment, according to Rae Tyson, spokesman for NHTSA.

Congress predicts this will result in the sale of about 250,000 new vehicles. The funding is good only until Nov. 1 and could run out before that. In that case, the voucher pro gram — unless Congress ap propriates more — would end.

Consumers would be able to start using the vouchers as soon as the National Highway Traffic Safety Administration finalizes the rules — a process that must conclude within 30 days of the president’s approval.

Under the program, trade-in vehicles, 1984 models or newer, must have average fuel economy of no more than 18 miles per gallon. And the new car or truck must get better gas mileage than the one that was scrapped.

The payoff grows depending on the difference in the fuel efficiencies of the old and new cars. For instance, a new car getting at least 4 more miles per gallon than the old car will be eligible for a $3,500 voucher. A new car getting at least 10 more miles per gallon would get a $4,500 voucher.

To guarantee vehicles are actually roadworthy — and not just sitting on cinder blocks — trade-ins must be registered and insured to the same owner for at least a year.

Kudos & Pats in the Backs

Image Courtesy: Apture

Cash for clunkers proponents in Congress said the subsidies will spur sales.”The simple fact is that we need to get Americans into car showrooms and this is the bill that will do it,” said Rep. Candice Miller, R-Mich., in a statement.

Sen. Debbie Stabenow, D-Mich., said the program will boost jobs in auto states. “This program will provide an economic stimulus at a time when hardworking families need it most,” Stabenow said in a statement.

GM said it had decided to keep 60 of the more than 1,000 dealers with whom it had sought to terminate agreements. The reversals were made after the automaker corrected financial information that was used to evaluate which stores to keep.  Dealers applauded the Senate’s action yesterday, and some got additional good news.  John McEleney, chairman of the National Automobile Dealers Association, hailed the measure, saying it “will boost consumer confidence, get the economy going again and reduce our dependence on foreign oil. Congress is giving consumers a strong incentive to replace their older vehicles with new, more fuel efficient cars and trucks.”

Transportation Secretary Ray LaHood said “The program is an important step forward for America. “It provides incentives for consumers to buy new, more fuel-efficient cars and trucks, providing a boost to the auto industry and protecting jobs, while limiting fuel use and greenhouse gas emissions.”

The legislation comes with number-one US automaker General Motors in bankruptcy and Chrysler emerging from court protection under a government-backed alliance with Italy’s Fiat in the face of plunging auto sales.

Cash for Clunkers Update from Europe (Channel 4 via Autobloggreen)

Several other countries, such as China and Italy, have offered similar trade-in vouchers. And lawmakers point to the success of Germany’s program as indication that vouchers can turn dismal auto sales around.  At the end of the program’s first month, sales in Germany were up 21 percent from a year before. During the same period, U.S. sales slumped 41 percent. Now,  a leading provider of automotive data and intelligence says the European motor industry is showing signs of recovery following the introduction of scrappage schemes on the continent.  According to a new study by Jato Dynamics, the European automotive market may be rebounding ever so slightly from its alarming lows of early 2009.

Though new car purchases are down by just over 13 percent year-on-year, there was actually a mild 2.4 percent improvement in May over April. The German market is now 39.7% up on May 2008 – a 20.3% improvement over last month’s figures. France, meanwhile, is up 11.8% over the figures for April.  “If Germany provides a template for the other markets where scrappage schemes have been introduced, we may be at the very beginning of a period of recovery in Europe. It’s far too early to know what the sustained effects of the incentives will be, but at a time when the industry needs to see some rays of hope, it’s encouraging to witness some improvement ” says David Di Girolamo, Head of Jato Consult. Interestingly, small, fuel efficient hatchbacks are performing better than the rest of the market, which is thought to be due to the various scrapping schemes in Europe.

The US market has steadied somewhat from lows earlier this year but the sales pace in May remained 33.7 percent below that of one year ago.  Let’s hope the American consumers will follow their European counterparts in boosting the vehicle market> Eeven if it is only a liitle, the market can use any push to build its recovery.

(Source: Detroit Free Press, The Detroit News, The Auto Channel, The Examiner, EEtimes.com)

Cash for Clunkers hit a speed bump Tuesday, June 16, 2009, in the U.S. Senate. It appears some Senators have “bailout fatigue” in general and “auto industry bailout fatigue” in particular. According to The Detroit News, Republican Senators are pushing back, citing the $85 billion in aid already provided to prop up ailing and bankrupt GM and Chrysler.

Image Courtesy: Apture

Some Democrats, including Diane Feinstien (D-California) also oppose the bill in its current form because they think it does not go far enough to improve fuel economy of vehicles on American Roads (there are, of course, Republicans in the opposition, but they oppose the measure because they think we’ve already spent too much money on the auto industry). As reported earlier, a Cash for Clunkers provision was added last week to a $106 billion bill to fund the wars in Iraq and Afghanistan. The idea was to attach a Cash for Clunkers provision to an existing bill already moving through the Senate so quick passage could be assured. Wrong.

Senators who support Cash for Clunkers need 60 votes to keep the Cash for Clunkers provision from being removed from the wartime funding bill. That could prove to be a problem.

Just hours after Sen. Judd Gregg, a New Hampshire Republican, denounced the inclusion of the cash-for-clunkers amendment as “unfunded baggage” on the war spending bill this evening, Senate Majority Leader Harry Reid delayed a vote until Thursday.

“It passes on new debt. Why would we do that?” Gregg asked in a floor speech. He said he would challenge the measure “at the appropriate time.” Senate Majority Leader Harry Reid delayed voting on the bill until Thursday.

Democrats control 58 seats in the Senate. But two — Edward Kennedy of Massachusetts and Robert Byrd of West Virginia — are ill. And Democrats led by Diane Feinstein of California have opposed the legislation as it stands, saying it does not do enough to boost fuel efficiency.

The legislation narrowly survived in the House, but for reasons mostly unrelated to the car-sales measure. Republicans were near unanimous in opposing the spending bill, objecting mostly to a provision that would boost International Monetary Fund lending.

“This bad legislation runs a con game on the American taxpayers and America’s military men and women,” said Rep. Mike Rogers, R-Brighton. He and five other Michigan Republicans voted no.

Michigan Democrat Debbie Stabenow urged quick passage of the stimulus.

“It will not help as a stimulus if it is done six months or a year from now,” she said.

If the Senate approves it, the measure will go to President Barack Obama for his signature. Then the National Highway Traffic Safety Administration will have 30 days to put regulations in place for the program which – under the war spending provision – will expire on Nov. 1.

In a related news item from across the Atlantic, Phakamisa Ndzamela writing for Reuters reported that South Korea’s Hyundai Motor Company has so far received the lion’s share of new car orders under the British government’s vehicle scrappage scheme, with sales boosted by an interest in smaller cars, according to figures obtained by Reuters.

The 300 million-pound ($491.9 million) scheme invites motorists to trade in cars more than 10 years old in return for a 2,000 pound subsidy to buy a new vehicle, in an effort to help an industry which has been severely dented by the recession.

The government earlier in the week said the scrappage scheme had resulted in 60,000 new orders in the period from April 22 to June 7.  Out of the 15 car companies in the UK that Reuters contacted, Hyundai was in pole position, stating that its latest figures, which covered the period from April 23 to June 7, amounted to 8,246 new orders

Ford came second in the number of car orders at 8,050 followed by Toyota at about 7,800 vehicles.  Following are company estimates of scrappage scheme new car orders covering the period April 22 to June 17:

• Hyundai 8,246
• Ford Motor Company 8,050
• Toyota Motor Corp 7,800
• Kia Motors UK 7,300
• Volkswagen 4,591
• Vauxhall 3,909
• Nissan 3,202
• Renault 2,600
• Peugeot 2,500
• Citroen 2,500
• Honda 2,335
• BMW and MINI 1,722
• Mazda 1,355
• Volvo 1,161
• Chevrolet 950

EETimes.com reports thatcrisis in the global automotive market is far from over. In May, the European market fell by 5 percent against the same month last year. Nevertheless, within the region, local markets developed extremely different, with Germany adding 40 percent (in terms of units) and Russia declining 57 percent. The reason for the hefty differences were the public incentives for buyers who scrapped their old car and bought a new one in some countries.  The US market has declined by 37 percent over the first five months this year. In may, sales for light vehicles declined by almost 34 percent to 923.000 units.  In contrast to other countries, the incentives in the United States will be connected to the fuel efficiency difference between old and new car.  Japan also fared weak, with sales declining 17 percent in May and 22 percent for the first five months.  the emerging markets, the crisis was far less pronounced. Brazil added 3 percent, boosted by an incentive program. India declined 1 percent in May, but over the first five months the market developed slightly positive with a plus of 2 percent. In China, the economic stimulus package and the reduction of sales tax on cars led to an increase by 55 percent in May. In that month, in China 728.000 light vehicles were sold. Thus, the Chinese market has become extremely relevant for European and Japanese car exporters. As a comparison: The entire European market (not restricted to EC countries) had a volume of 1.3 million units.

In light of all that’s reported, it seems the U.S. politicans needs to do everything to promote Automobile sales, including the passage of this Cash for Clunkers bill.  Wrangling over the details of a bill that can spur auto sales could have some severe consequences on the economy.  Will they do it?  Let’s hope so!