The new law was tucked into a $106 billion war funding bill Congress passed and sent to the president. The cash-for-clunkers provision is initially funded to $1 billion and expires Oct. 1, but another $3 billion to $4 billion will likely be added later this year.
Consumer Web site Edmunds.com estimates it still, however, could boost sales this year by about 250,000 vehicles. This week, General Motors CEO Fritz Henderson said the automaker is seeing some stabilization in its sales and estimated GM could see a sales boost of about 10% if the cash-for-clunkers program takes effect.
Dealers have said they need this to help get customers back in showrooms.
"Cash-for-clunkers will provide a much-needed, short-term boost to the auto industry," said American International Automobile Dealers Association President Cody Lusk in a statement. "Americans need a reason to return to their local dealership, and this program, which benefits consumers and the environment, is a very good reason."
The program would take effect within 30 days of being signed by President Obama, which he has said he will do. Cash-for-clunkers is expected to be in operation in early August.
How it works:
• Passenger cars from 1984 or newer with combined miles per gallon ratings of 18 or less are eligible. Owners could get a $3,500 voucher if they trade for a new car rated at least 4 mpg higher or $4,500 if they buy a car that gets 10 mpg more.
• SUVs, pickups or minivans 1984 or newer that get 18 mpg or less could earn a voucher for $3,500 if their new SUV, truck or minivan gets at least 2 mpg more than their old vehicle or $4,500 if the new truck or SUV gets at least 5 mpg more.
In either case, the owner of the trade-in must have had it at least a year, and it must be drivable. Dealers must provide assurance the trade-in then is scrapped.
Similar programs have already been enacted in Europe and have spurred stronger sales almost immediately after taking effect. Jeremy Anwyl, CEO of Edmunds.com, says the program may not result in a similar boost to U.S. sales, because drivers here don’t keep their cars as long as European drivers do.
"Even 250,000 new vehicle sales will not provide the impact needed for an industry looking for at least 5 million in additional sales," he said. (Tire Review/Akron)
