Cash for Clunkers Gets a $2 Billion Fill Up

Officially known as the Consumer Assistance to Recycle and Save Program, the temporary federal program gives buyers a credit of $3,500 or $4,500 towards a new, more fuel-efficient vehicle when they trade in their old gas-guzzling cars or trucks. The idea is to energize the economy; boost auto sales and put safer, cleaner and more fuel-efficient vehicles on the roads.

President Obama said, "Not more than a few weeks ago, there were skeptics who weren't sure that this Cash for Clunkers program would work. But I'm happy to report that it has succeeded well beyond our expectations and all expectations."

Launched on July 27, within the first five days, the National Highway Traffic Safety Administration, NHTSA, which administers the program, had already officially received 40,000 requests for reimbursement from auto dealers, worth about $160 million in rebates.

A survey done by the National Automobile Dealers Association showed at least 200,000 deals had been completed by July 31 but not yet officially submitted by the dealers for reimbursement.

"If that's true, and we're being told it probably is, then the entire $1 billion is just about exhausted," said Congressman David Obey of Wisconsin, chairman of the House Appropriations Committee who introduced the legislation.

Obey said the stop-gap funding for Cash for Clunkers comes from the Department of Energy's Innovative Technology Loan Guarantee Program, which is not scheduled to award funding until late 2010.

"Some would call this letting the markets work!" said Obey. "Consumers have spoken - with their wallets - and they're saying that they like this program. And clearly, it's doing what it was intended to do – to spur car sales in this sluggish economy."

Cash for Clunkers display at the Lujack Northpark Auto Plaza in Davenport, Iowa draws customers to an authorized dealership. (Photo courtesy NADA)

The program runs through November 1, 2009, or when the funds are exhausted, whichever comes first.

Senator George Voinovich, an Ohio Republican said, "As is evident from the extraordinary response to the program, it is a win-win – it will stimulate our American economy, provide much needed jobs and it will promote fuel efficient cars to benefit our environment."

Automakers and automobile dealers have seen a significant increase in vehicle sales and dealership foot traffic since the launch of the Cash for Clunkers program, according to the Alliance of Automobile Manufacturers.

"This increase in vehicle sales is generating important tax revenue for communities where in some cases roughly one-quarter of sales tax revenue is dependent on receipts from auto sales. And while the program has provided much need economic stimulus to the auto industry, it has also yielded significant energy security and environmental benefits," the Alliance said in a statement Thursday.

"Consumer response to the CARS program has been extremely encouraging," said Michael Stanton, president and CEO of the Association of International Automobile Manufacturers. "We hope these increased sales will provide the jump-start necessary to re-energize the auto industry in the United States and increase the overall fuel economy of the domestic fleet."

NHTSA estimates that the average fuel economy improvement for transactions under the CARS program is 9.6 miles per gallon. This amounts to an annual fuel savings of 58 million gallons of gasoline or an average gasoline savings of $580 a year for each new vehicle owner.

That equates to an approximate 575,000 ton reduction in emissions of the greenhouse gas carbon dioxide, the Auto Alliance estimates.

Among Auto Alliance members, Ford reports a nine mile per gallon increase from trade-in vehicle to new vehicle purchase.

General Motors reports a 54 percent increase in small car sales since the Cash for Clunkers program was launched.

Toyota's Corolla and Prius models average 39.5 mpg and accounted for nearly 40 percent of Toyota's sales mix under the program, while 57 percent of Mazdas sold so far under the program were highly fuel-efficient Mazda 3's.

Volkswagen reports over 60 percent of its Cash for Clunkers sales are clean diesel Jetta TDI's which get 34 miles per gallon.

The Auto Alliance says about 70 percent of Cash for Clunkers trade-ins have been gas-guzzling vans, trucks and SUVs.

Consumers looking for more information can visit www.cars.gov or call the CARS toll-free 24-hour hotline at 1-800-424-9071.

Copyright Environment News Service, ENS, 2009. All rights reserved.