Congress’ quick action on a Cash for Clunkers $2 billion extension gives more hope to both automakers reeling from their worst year ever, as well as car buyers looking for terrific deals. Designed to prime the auto market pump in the midst of America’s worst economic slump since the Depression, the Car Allowance Rebate System (CARS) program offers consumers a $4,500 trade-in voucher towards the purchase of a more fuel efficient model. Though several restrictions exist, the initial $1 billion appropriation for the program—expected to last roughly six months—was exhausted in less than a week. With the additional funds, millions more Americans are expected to take advantage of the once-in-a-lifetime offer.
The CARS program—popularly dubbed “Cash for Clunkers” by auto sellers and the media—has two distinct purposes. The first and foremost purpose was to give a boost to both automakers and dealerships reeling in the face of recent economic woes. By guaranteeing a trade-in voucher that is often much higher than the actual wholesale value of the vehicle for trade, it encourages consumers who otherwise would have waited to purchase a car to get down to their dealership today. Indeed, the necessity of emergency supplemental funds demonstrated the success of this effort in a way nobody predicted.
The other virtue of the cash program is an immediate and noticeable improvement in fuel consumption on US highways. The program is in general limited to trade-in automobiles which get less than 18 miles to the gallon, and a number of models are in fact ineligible. Dealers can inform consumers as to their car’s eligibility, and full information about exceptions is available online. In order to insure that the fuel efficiency gains are maintained, dealers are required under the law to actually destroy the cars traded in by using a special chemical which seizes up the engine. The environmental and geopolitical gains expected as a result were a major source of the bill’s bipartisan support.
While the Cash for Clunkers $2 billion extension gives more hope to shoppers looking for a great deal on a new car, many observers expect that even these new funds will be exhausted in a matter of days. Consumers who wish to exchange their gas guzzlers for a new, sleeker model are encouraged to get to a dealership today to take advantage of the savings. The CARS program is changing the way Americans drive faster than anyone predicted.
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- Energizing the Economy: Cash for Clunkers Accelerates Auto Sales
- Benefits of Obamas Fuel Efficiency Plan
