Cash-for-clunkers
June 20, 2009
The US Congress appropriated $1 billion (0.7 billion euros) for the program that will allow car owners to turn in old gas guzzlers for newer, more fuel efficient cars. President Obama has already agreed to sign the legislation, which closely echoes similar plans used to good effect in Germany, France, Italy and Spain.
Congress also assuaged the fears of foreign carmakers that the program would only apply to American-made cars. The bill passed by Congress contains no such restrictions, and means a Toyota made in Tokyo could be traded for a Chrysler made in Detroit, and vice-versa, a congressional staffer confirmed.
Stefan Jacoby, Volkswagen of America's president and chief executive, called the vote “historic” and in a statement urged US shoppers to put Volkswagen's “fun-to-drive, fuel-efficient vehicles” on their “shopping list.”
What makes a car a "clunker"?
Qualifying autos in the US will be in good driving condition, less than 25 years old, have been continuously insured in accordance with state laws and have a fuel efficiency of 18 miles per gallon (7.65 km per liter) or less.
A qualifying car or truck will potentially be brought to a new car dealership for up to $4500 (3200 euros) in a tax free voucher which will be applied toward the sale or lease price of the new vehicle, which must have a fuel efficiency of at least 22 MPG.
In Europe, despite several nations having their own cash-for-clunkers programs, new car registrations fell for the 13th straight month according to industry data published on Tuesday.
Luxury and higher end vehicles in Europe have seen little or no results from the cash-for-clunkers program, whereas more economic brands such as Hyundai have seen growth.
Registrations of new cars in Europe fell 4.9 percent to 1.27 million vehicles in May.
In the US, the auto industry market remains in steep decline, with sales for 2008 down 17.5 percent to 13.2 million vehicles and figures expected at less than 10 million for 2009.
The US cars exchange program is expected to inject an additional 250,000 new cars sales, a number which should please the automakers in Detroit.
sjt/Reuters/AFP/dpa
Editor: Nick Amies