Preliminary rules for the CARS act – which was known as the Cash for Clunkers bill and is now more officially known as the CAR Allowance Rebate System or the Consumer Assistance to Recycle and Save Act of 2009 – were released by the Federal government today. Automakers have been busy doubling the rebates and emphasizing the green results of the bill, but today was the first chance to see exactly how CARS will work. It’s about time.
Most of the work is the responsibility of the dealers selling the cars. This makes sense, since the law was passed, in part, to help them. Dealers can find a nearby facility to scrap the cars that are turned in from the CARS website, and need to confirm with the scrappers directly that they can crush or shred the vehicles. Dealers must also do things like disable the engines of the cars coming in, as described on page 127 of the 136-page rulebook (PDF), and have seven days of accepting a trade-in vehicle to get paperwork – a lot of it – to the government in order to receive their money.
Customers are responsible for bringing in an old “clunker” that gets, at most, 18 mpg (thanks, charities) and buy a new vehicle with better mpg. It looks like it might be possible to get more than $4,500 for your trade-in, because any scrap value that the trade-in has can be added to the rebate.
Not everyone is pleased with CARS. The Automotive Aftermarket Industry Association (AAIA) released a statement, available after the jump, saying they anticipate “a consumer backlash once reality replaces the hype.” There won’t be that much time for the hype to die down, though, since the CARS program is currently scheduled to end on Nov. 1, or when the $1 billion set aside for the program runs out (it could be extended).
PRESS RELEASE:
AAIA Predicts Consumer Backlash on ‘Cash for Clunkers’
“It wouldn’t surprise me if there is a consumer backlash once car owners realize that ‘Cash for Clunkers’ is nothing more than a clever slogan for a program to spend $1 billion of our tax dollars to fund a government subsidized vehicle trade-in to help new car dealers sell cars,” said Kathleen Schmatz, AAIA president and CEO. “Consumers will soon learn that they are simply trading in their vehicle and will still have to jump through all of the hoops to qualify for and purchase a new vehicle.The much heralded fuel efficiency and environmental benefits of purchasing a new vehicle could easily be achieved through better maintenance of an existing vehicle or trading up to a newer used vehicle, according to AAIA. Any savings from improved miles per gallon will be lost from the costs involved in destroying and disposing of the “clunkers.”
AAIA has strongly opposed “Cash for Clunkers” that prematurely destroys vehicles and their valuable parts and components. “Destroying vehicles with many more years of life denies consumers more affordable used vehicles and pulls vehicles from the aftermarket supply chain,” said Schmatz.
The Consumer Allowance Rebate System, the official name for “Cash for Clunkers,” offers vouchers up to $4,500 to new car dealerships for consumers who trade-in their vehicle for a new, more fuel-efficient vehicle
http://www.autobloggreen.com/2009/07/24/rules-for-cars-the-cash-for-clunkers-bill-released/
On Thursday July 30, 2009, 11:53 pm EDT
WASHINGTON (AP) — The White House said Thursday it was reviewing what has turned out to be a wildly popular “cash for clunkers” program amid concerns the $1 billion budget for rebates for new auto purchases may have been exhausted in only a week.
Transportation Department officials called lawmakers’ offices earlier Thursday to alert them of plans to suspend the program as early as Friday. But a White House official said later the program had not been suspended and officials there were assessing their options.
“We are working tonight to assess the situation facing what is obviously an incredibly popular program,” White House press secretary Robert Gibbs said of the Car Allowance Rebate System. “Auto dealers and consumers should have confidence that all valid CARS transactions that have taken place to date will be honored.”
Gibbs said the administration was “evaluating all options” to keep the program funded.
A Transportation Department official said the department was working with Congress and the White House to keep the program going. The administration officials spoke on condition of anonymity because they were not authorized to speak publicly about the discussions.
The CARS program offers owners of old cars and trucks $3,500 or $4,500 toward a new, more fuel-efficient vehicle.
Congress last month approved the program to boost auto sales and remove some inefficient cars and trucks from the roads. The program kicked off last Friday and was heavily publicized by car companies and auto dealers
Through late Wednesday, 22,782 vehicles had been purchased through the program and nearly $96 million had been spent. But dealers raised concerns about large backlogs in the processing of the deals in the government system, prompting talk of a possible suspension.
A survey of 2,000 dealers by the National Automobile Dealers Association found about 25,000 deals had not yet been approved by NHTSA, or nearly 13 trades per store. It raised concerns that with about 23,000 dealers taking part in the program, auto dealers may already have surpassed the 250,000 vehicle sales funded by the $1 billion program.
“There’s a significant backlog of ‘cash for clunkers’ deals that make us question how much funding is still available in the program,” said Bailey Wood, a spokesman for the dealers association.
Alan Helfman, general manager of River Oaks Chrysler Jeep in Houston, said he was worried that the government wouldn’t pay for some of the clunker deals his dealership has signed because they aren’t far enough along in the process.
His dealership has done paperwork on about 20 sales under the clunker program, but in some cases the titles haven’t been obtained yet or the vehicles aren’t yet on his lot.
“There’s no doubt I’m going to get hammered on a deal or two,” Helfman said.
The clunkers program was set up to boost U.S. auto sales and help struggling automakers through the worst sales slump in more than a quarter-century. Sales for the first half of the year were down 35 percent from the same period in 2008, and analysts are predicting only a modest recovery during the second half of the year.
So far this year, sales are running under an annual rate of 10 million light vehicles, but as recently as 2007, automakers sold more than 16 million cars and light trucks in the United States.
Even before the suspension, some in Congress were seeking more money for the auto sales stimulus. Rep. Candice Miller, R-Mich., wrote in a letter to House leaders on Wednesday requesting additional funding for the program.
“This is simply the most stimulative $1 billion the federal government has spent during the entire economic downturn,” Miller said Thursday. “The federal government must come up with more money, immediately, to keep this program going.”
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