• Jun 25, 2009
President Obama has taken pen to paper and signed off on Cash-for-Clunkers, a law that could help the auto industry shake its year-long funk. The Transportation Department now has 30 days to determine the rules and regulations for Cash-for-Clunkers, placing the start of the program at the end of July.

The law as it was signed will give the power to decide which vehicles will be eligible for the program to the dealers. The dealers will also be in charge of scrapping the older vehicles, which must be less than 25 years old to be eligible for federal funds. Clunker-eligible cars must be also owned for at least one year to qualify for the program. Those eligible for Cash-for-Clunkers will receive up to $4,500 towards the purchase of a new, more fuel efficient vehicle. To get the full $4,500, those new cars must be at least 10 mpg more fuel efficient than the older model they replace, and trucks must be 5 mpg more efficient. Among the details of the law still being worked out is a plan to ensure that dealers are, in fact, scrapping the vehicles and not reselling them.

[Source: Automotive News, sub. req'd | Photo by MANDEL NGAN/AFP/Getty]


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  • 53 Comments
      • 5 Years Ago
      They should allow the credit to be used on certified pre-owned used cars, not everyone will be able to afford a new but a used one car with better mpg, this would help out more.
        • 5 Years Ago
        That doesn't bolster demand for Government Motors built new cars. :D

        Trading one used car for another doesn't increase demand for new cars for any company who builds cars.

        • 5 Years Ago
        Exactly Boxer.
      • 5 Years Ago
      The boondoggle alert is sounding!
        • 5 Years Ago
        Cash for clunkers = More Debt For Everyone With NO Result.

        Obama is an idiot.
        • 5 Years Ago
        God dammit. YAY FOR REWARDING PEOPLE WHO MADE POOR CHOICES! AND YAY FOR GIVING PEOPLE DEALS ON NEW CARS WHO CAN"T AFFORD THEM!
        • 5 Years Ago
        "YAY FOR REWARDING PEOPLE WHO MADE POOR CHOICES!"

        Yes, sheer stupidity on my part for taking a old car from a deceased distant relative for free. What was I thinking?

        "AND YAY FOR GIVING PEOPLE DEALS ON NEW CARS WHO CAN"T AFFORD THEM!"

        And what makes you think I can't afford a new car? I plan on playing cash, thank you very much.
      • 5 Years Ago
      Used cars do not create the jobs that new cars do so for that fact this offer should for US built cars and trucks only. All the people out there that say that this program will not work don't see the bigger picture. With the gas prices on the rise, how can you afford not to take advantage of this program?
        • 5 Years Ago
        They wanted it to be only for U.S and North American manufactured cars in one of the earlier version congress was considering, but they had to back off that requirement. It turned out it was a violation of our free trade agreements.
      • 5 Years Ago
      can someone PLEASE explain to me how this thing is supposed to work?!


      Christ- this is going to make me a butt-load of money
        • 5 Years Ago
        Simple. It isn't going to work. Not at all. If your car or truck is worth more than cash-for-clunkers amount (max of $4,500), the program doesn't make any sense. You can't trade in the vehicle, it must be crushed.

        So the only people who could use it are those driving true clunkers. And people who drive true clunkers either can't afford or don't want to pay for a new car.
        • 5 Years Ago
        I have people trade in older clunker type cars for new or one or two year old cars all the time. Lately most of these people have been going with used cars instead of new ones. I can sell them a used 2008 XYZ for 27,000-32,000 while a new version of the same car is 36,000-40,000. ACV on their old car is really only a couple hundred dollars but maybe you show them 800 or a 1,000 to make them feel better. Yes they are paying cash too plenty of people have lots of cash on hand right now just look at the savings rate. Lets see every car I have sold this month but three have been paid for with a cash. These are not inexpensive cars either. The most expensive was over 40,000 after taxes.

        If instead of getting 100, 200 or 300 ACV for their trade they can get 3,500 or 4,500 that covers enough of the gap that many of these people will buy a new car instead. They will go for a new car at $36,000 minus the $4,500 instead of the used car at $29,000 or $30,000.

        Also keep in mind the used car market is getting very weird. Fewer leases and fewer new cars being purchased is driving used car prices up especially for one to three year old cars. As automakers increase incentives to get the 2009s off the lot the gap will be closed even further. That $4,000 to $8,000 gap might shrink to $2,000 or $3,000 for certain models.


        Oh and Audi I have a feeling you will be in the same boat as I am for one of my brands. The new passenger car has to get over 22 mpg combined or you can't trade in a clunker and get the voucher. Most of my cars don't get 22 mpg combined with the way the EPA raped us using the new testing and I am sure Audis are the same way. All that AWD, safety and luxury features just hit the city mileage too much even if the highway mileage is close to 30 mpg.

        Only the four smallest models for Volvos will qualify and only the 9-3 Saabs will qualify. I think most VWs will qualify as they get ok gas mileage and they have the diesels. I just don't see many Audis making it except for the smallest ones.

        • 5 Years Ago
        tiki: Dealer must crush the car if they are going to use the cash-for-clunkers. Therefore it's only worth $4500, regardless of the condition.
        • 5 Years Ago
        No, I get customers trading in all sorts of garbage on brand new Audi's all the time- young proffessionals who are still driving thier college cars, or just getting rid of the POS they were driving to save money.

        An extra $3500 or $4500 will be HUGE on top of all the other incentives currently in place.
        • 5 Years Ago
        Maybe you missed my point...my car sits on the edge, I know it is not combined. But this bill will increase my Trade in value. A dealer should see the value in re-sale it...instead of encouraging it to be destroyed. So will a dealer offer me more than the voucher value.
        • 5 Years Ago
        Here's is one of the big questions on how it is going to work. From the government's www.cars.com website for Cash for Clunkers:

        "Bring the title, registration and insurance papers showing continuous registration and insurance coverage for the past full year."

        What registration and insurance papers does anyone have showing continuous registration and insurance coverage for the past year? You might have your current registration and insurance papers for this year. Say your car's registration and insurance date is in January. Then your current registration and insurance paper would show it's been registered and insured since January. But what about the rest of the full year you have to prove? How are you going to show them anything on that?

        And even if you can show them you registered and insured the car in January, how do they know you didn't cancel the insurance and registration two weeks later when the car broke down and you decided it wasn't with fixing?

        They are going to have to come up with something better than this plan, because just telling the buyer to prove they've had it licensed and insured for a year isn't going to work. The customer has no way to prove it. It will have to go through DMV records.
        • 5 Years Ago
        tikirob: You don't get the trade in value AND the cash-for-clunkers-cash. It is basically one or the other. http://www.cashforclunkersfacts.com/bill-faq
        • 5 Years Ago
        So...hmmm. My truck qualifies and I can afford a new car. The questions is...my trucks trade in value is about $4500. It has lots of useful life and is a good truck (thus I am keeping it). It still has a retail value of about $8000 (via edmunds). So does this bill increase the trade in value of the truck to $5000 or more? The dealer would make more money in the long run.
        • 5 Years Ago
        It's not going to work. People who drive qualifying clunkers can't afford new cars and the credit markets are still frozen.
        • 5 Years Ago
        No. Because the people administering the program don't know how it's going to work either.
        • 5 Years Ago
        "No, I get customers trading in all sorts of garbage on brand new Audi's all the time"
        ...
        "I have people trade in older clunker type cars for new or one or two year old cars all the time."

        The issue is that it's pretty amazing how many "garbage" and "clunker-type" cars don't qualify. After checking several cars for myself and others, I've been surprised at how much stuff doesn't make the cut.

        "Then your current registration and insurance paper would show it's been registered and insured since January. But what about the rest of the full year you have to prove? How are you going to show them anything on that?"

        The insurance is pretty simple - a letter/statement from your insurance company that the car has been continually insured from a specific date a year ago. Doesn't get any more valid than that. As for registration, just show two registration slips. If it was registered last year, was registered for the current year, and is registered now, that ought to be enough. As for registering/cancelling/re-registering the vehicle repeatedly over the last year, I'd say that doesn't happen a lot since the states I'm familiar with don't refund registration fees if you cancel it. Practically speaking, insurance would probably be a better indicator of intent to use the vehicle because it's almost always a heck of a lot more costly than registration fees, and it'd be kind of odd to pay insurance premiums on an unregistered vehicle that can't legally be driven on the road.
      • 5 Years Ago
      I definitely have mixed emotions about this program. Two good points are that there's a finite amount of money involved, so it won't last forever, and cars have to be newer than 25 years old, so we don't have to worry about any '59 Cadillacs being crushed.
      • 5 Years Ago
      lewis,
      but you said obama was a lefty
      • 5 Years Ago
      I think they need to re-think what you can buy.

      for example my sister is looking to get rid of her 97 Blazer and the dealer will only give her $1500 max for it, but she in no way can afford a new car. she is looking at a used 4 cylinder fusion in the range of $10k. it would bne nice if the $4500 worked for her case since she would be getting rid of a 16mpg truck for a 26mpg car, that's a 10mpg increase (real world driving here, not EPA estiamtes eitehr) adn the car is from 2006.

      i think they should allow you to buy any 4 cylinder car from 2005 and newer but the trade must only be for a 10mpg jump or higher in fuel economy. I think we cna get rid of many 4x4's frmo teh 90's this way

      even if she looked at a Focus the price would still be too high for her, so sh's going to keep running hte Blazer for a few more years, and I'm not even sure the cat is working as is.
        • 5 Years Ago
        I've seen loaded focuses going for around 10000 (they are MY 2008) and new Fusions that say "fully equipped" for around 12,000. With this clunkers it would be a great opportunity to get a car for nearly half off!
      • 5 Years Ago
      A car can run and drive just fine without the doors, windows, fenders, passenger/rear seats.

      STRIP IT
      • 5 Years Ago
      I've always wondered what all the modern Presidents do for a computer. There isn't one in the oval office, at least never in press photos. Cramped laptop?
      • 5 Years Ago
      So this sounds like some sort of wealth redistribution.
      • 5 Years Ago
      You can't entice me to give up my clunker! Why buy a new car when my fox body gets me to/from work every day just fine. Plus the govt thinks I only get 18mpg, but I get 20. Hehe.
      • 5 Years Ago
      How about using less pens to sign the Bills to save us some money, Mr. Obama?
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