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Many car buyers won't qualify for 'Cash for clunkers'
Updated: August 20, 2010, 11:54 PM
The federal government’s proposed “cash for clunkers” program, aimed at getting car buyers to purchase more fuel-efficient vehicles and trade in autos with poorer fuel economy, is moving closer to reality. It has passed in the House and awaits a vote in the Senate.
Just how much of a difference it will make in car sales and whether it is a sound economic idea are still being debated.
Its backers view the program as a way to boost slumping new-car sales by offering vouchers of up to $4,500 to take “gas guzzlers” off the road for good, since the eligible trade-ins would be scrapped.
Some critics have questioned whether cash for clunkers is an appropriate use of taxpayer dollars and challenged the qualifying standards applied to the vehicles.
Tony Daily, general manager of Towne Automotive Group, said he believes the program will stimulate auto sales, but he has questions about its terms and worries about excluding buyers who could really use the help.
“I think there are better ways to use this,” Daily said. “I would rather have more people have more access to a smaller amount [of money].”
Paul Stasiak, president of the Niagara Frontier Automobile Dealers Association, said his group is “100 percent in favor” of a program that helps stimulate sales. But he acknowledged some issues need to be resolved, such as a dealer’s responsibilities for scrapping the trade-ins. And some customers are holding back on purchases until the program takes effect, hurting dealers in the short term.
Some car shoppers interviewed this week said they were familiar with the program but were doubtful they could take advantage of it or were unhappy with the idea. “It sounded great. I had my hopes up at the beginning,” said Robert Wright of Buffalo, who was shopping with his wife, Beth.
But the Wrights are considering trading in a Jeep Cherokee for a new Ford Explorer, a swap that wouldn’t meet the program’s gas mileage specifications, he said.
John DeJohn of East Amherst said he was not enthusiastic about the program, mentioning the maximum $4,500 voucher from the government. “Who’s going to pay for that? Guys like you and I,” he said.
DeJohn also thinks the program could drive up the price of used cars, since it will take more of those vehicles out of circulation.
Bill Brown was also critical of the idea of the federal government devoting dollars to the program. “This cash for clunkers, it’s a clunker,” said Brown, who splits his time between Orchard Park and Florida.
The program has generated lots of questions about how it would operate:
Q: Where does the legislation stand?
A: The House has approved it, and the Senate is preparing to vote on it as part of the $106 billion war spending bill that the president would also have to approve.
Q: What qualifies as a “clunker”?
A: The trade-in vehicle can be no older than a 1984 model and get 18 mpg or less in combined city/highway fuel economy. It also has to be registered and insured in one person’s name, and in use for at least a year.
Q: Which new vehicles are eligible under the program?
A: They must be priced at $45,000 or less. New passenger cars must get at least 22 mpg in city/highway fuel economy, and light trucks must get at least 18 mpg. Domestic and import brands are eligible.
Q: How do the vouchers work?
A: The money would be sent directly to the car dealer on your behalf. How much your voucher is worth depends on the combination of the fuel economy ratings for your trade-in and the new vehicle you are buying.
If the new car you buy has a federal fuel economy rating at least 4 mpg better than your trade-in’s, you qualify for a $3,500 voucher. If the new car is rated at least 10 mpg better, you qualify for the maximum $4,500.
It’s different for light duty trucks and SUVs. If the new one you buy has a fuel economy rating at least 2 mpg higher than the trade-in truck, you qualify for a $3,500 voucher; if the rating is least 5 mpg higher, you qualify for the full $4,500.
Q: Where can I find the fuel economy ratings?
A: They are listed at
www.fueleconomy.gov
.
Q: What happens to the clunker trade-in?
A: The dealer has to send it to a scrap yard to have its engine and transmission destroyed.
Q: When will the program start?
A: The exact timing is still being determined. It is expected to run from July 1 to Nov. 1, but federal transportation officials have said they will need time to set up the program’s rules.
Q:How much will it cost?
A: It is estimated at $1 billion.
Q: What is the estimated impact?
A: The Congressional Budget Office expects it will help generate an additional 625,000 new-vehicle sales over the life of the program.
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