ALERT: $2B Cash-For-Clunkers Extension Passes Senate, Obama To Sign

August 7, 2009


Yesterday afternoon, the US Senate passed a $2 billion extension to the Car Allowance Rebate Systems (CARS) program--better known as "Cash for Clunkers"--by a vote of 60 to 37. President Barack Obama is expected to sign it today.

The vote approved a bill identical to the one passed last Friday by the US House of Representatives, before it recessed for August. The Senate ends its session today, which lent urgency to the vote. The cash is expected to last roughly through Labor Day.

The Clunkers plan has been remarkably successful at getting consumers into car dealerships, and the program appeared to have run through its initial allocation of $1 billion in just its first week.

Republicans had initially announced they would oppose any extension, but heavy lobbying from both the White House and auto dealers combined with the Democratic majority in the Senate to pass the bill.

Dealers have said registration and processing paperwork is time-consuming, with frequent slowdowns in the computer system used by the Department of Transportation to process the rebate applications. Some dealers have now received their rebates, however.

Some dealers also report shortages of fuel-efficient cars like the 2009 Toyota Corolla, 2009 Ford Focus, and 2010 Toyota Prius.

But the torrid sales pace of July 27-31 isn't expected to continue indefinitely. The rate of vehicle sales essentially doubled during that period from its level before the program kicked off. The new funding is enough for roughly half a million additional clunker trade-ins.

Cars must get 22 mpg or more

Under the program, owners of 1984-2002 vehicles with a combined EPA mileage rating of 18 miles per gallon or less qualified for a $3,500 voucher towards the purchase of a new car rated at 22 mpg or better. The maximum amount of $4,500 is available to those who buy cars rated at 10 mpg (or more) higher than the trade-in.

There's a different scheme for light trucks: The new vehicle must be rated at 18 mpg or better, and must also be 2 mpg more efficient than the truck traded in to qualify for the $3,500 voucher. Boosting the mileage by at least 5 mpg gets the full $4,500.

Cash-for-Clunkers engine destruction, using sodium silicate solution, from Wayzata Nissan

Cash-for-Clunkers engine destruction, using sodium silicate solution, from Wayzata Nissan

[Detroit News, Automotive News (requires subscription), The New York Times]

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