Cash for Clunkers Bill

Until the Wheels Fall Off...

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The title of this entry is an overly worked cliche in the auto world. Describing a certain type of driver who used his or her vehicle until the above actually happened, it does not reflect just how good and reliable cars are today. In fact, you would be hard-pressed to find a proverbial "Yugo" sold in the U.S. over the last ten years.

The big news in this industry this week, which was a welcome respite from rehashing GM and Chrysler's bankruptcy details, was passage by the House and Senate of a "Cash for Clunkers" bill that will hopefully move reluctant buyers off their fences. Here is the deal:

Buyers will receive a $3,500 or $4,500 rebate for trading in their older and less fuel-efficient vehicles upon purchase of a new and higher-mpg version. Rules are that the trade-in must be in drivable condition, have a combined city/highway fuel economy rating of 18 mpg or less, have been continuously insured and registered to the same owner for at least one year, and not be more than 25 years old. If your "clunker" meets those criteria, read on!

New passenger cars must have an EPA combined city/highway rating of at least 22 mpg. If the mileage of your new car is at least four mpg higher than the trade-in, $3,500 is available. If it's at least 10 mpg higher, $4,500 is coming your way.

The rules change slightly for new small trucks and SUVs, which must have a combined mpg rating of at least 18 mpg. The new vehicle must be at least two mpg higher than the old one to qualify for the $3,500 and at least five mpg higher for the $4,500. Large trucks are held to a unique standard that requires a new truck's combined city/highway mpg rating to be at least 15 mpg. If the mileage of the new truck is at least 1 mpg higher than the old truck, you get $3,500. At least 2 mpg higher nets you $4,500.

Approximately $1 billion of your taxpayer dollars have been set aside for this year-long program, so if you are considering that new-car smell again, the time is almost here. (Obama is expected to sign it into law later this month.) Similar programs have been in play in China and parts of Europe to great effect, as it clears the roads of less efficient and less valuable wheels for smarter long-term transportation. "Choose Your Car (or Truck) Wisely" indeed!

Posted on 2009-06-19 | Permalink | |

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