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May 6, 2009

‘Cash For Clunkers’ To Benefit Fuel Efficient Car Adoption

In forthcoming climate legislation, President Obama has been pushing for inclusion of a “cash for clunkers” program that would encourage consumers to trade in cars that get less than 18 miles per gallon for new, fuel-efficient cars.

The vouchers – good for $3,500 to $4,500 toward purchase of a new, fuel-efficient car that gets at least 22 mpg – would serve to bolster automotive industry sales and reduce reliance on foreign oil. The newer cars also would have a lower carbon impact. The rules are different for trucks and SUVs.

So far, Obama seems to be making headway in the House — the provision has been passed in the Commerce and Energy Committee — but his team has not begun discussions with the Senate, according to the Detroit Free Press.

Some estimate the program would take a million older cars off the roads. At this point, there is not a requirement that the cars traded in or bought be U.S.-made.

Here are some specifics:

• If the new car is at least 4 miles per gallon more efficient than the old one, the voucher would be for $3,500.
• A new car that is 10 miles per gallon more efficient would result in a voucher for $4,500.
• When it comes to small trucks and SUVs, if the old model gets less than 18 mpg, and the new one gets at least 18 mpg and is at least 2 mpg better than the old, the voucher is $3,500. Vehicles that get better than 5 mpg in improvement would qualify for a $4,500 voucher.
• Large light-duty trucks, if the new vehicle improves fuel efficiency by at least 1 mpg, the voucher is $3,500. An improvement of 2 mpg or more results in a voucher of $4,500.
• For pre-2002 work trucks and cargo vans weighing 8,500-10,000 pounds, any trade-in results in a $3,500 voucher.

The proposal is drawing some early criticism.

The Automotive Parts Remanufacturers Association says the proposal would harm the repair and repair parts businesses.

It also has been asserted that the resulting new car production actually may lead to higher carbon emissions, rather than reducing emissions as intended, because 10-20 percent of a car’s lifetime emissions come during the manufacturing process, according to the Washington Independent.

The deal also would bode poorly for used-car dealers.

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