Rules for CARS, the cash for clunkers bill, released
by Sebastian Blanco on Jul 25th 2009 at 9:01AM 
Preliminary rules for the CARS act – which was known as the Cash for Clunkers bill and is now more officially known as the CAR Allowance Rebate System or the Consumer Assistance to Recycle and Save Act of 2009 – were released by the Federal government today. Automakers have been busy doubling the rebates and emphasizing the green results of the bill, but today was the first chance to see exactly how CARS will work. It's about time. Most of the work is the responsibility of the dealers selling the cars. This makes sense, since the law was passed, in part, to help them. Dealers can find a nearby facility to scrap the cars that are turned in from the CARS website, and need to confirm with the scrappers directly that they can crush or shred the vehicles. Dealers must also do things like disable the engines of the cars coming in, as described on page 127 of the 136-page rulebook (PDF), and have seven days of accepting a trade-in vehicle to get paperwork – a lot of it – to the government in order to receive their money.
Customers are responsible for bringing in an old "clunker" that gets, at most, 18 mpg (thanks, charities) and buy a new vehicle with better mpg. It looks like it might be possible to get more than $4,500 for your trade-in, because any scrap value that the trade-in has can be added to the rebate.
Not everyone is pleased with CARS. The Automotive Aftermarket Industry Association (AAIA) released a statement, available after the jump, saying they anticipate "a consumer backlash once reality replaces the hype." There won't be that much time for the hype to die down, though, since the CARS program is currently scheduled to end on Nov. 1, or when the $1 billion set aside for the program runs out (it could be extended). We'll see.
[Source: Automotive News (sub. req'd), CARS.gov, AAIA]
PRESS RELEASE:
AAIA Predicts Consumer Backlash on 'Cash for Clunkers'
BETHESDA, Md., July 23 /PRNewswire-USNewswire/ -- As new car dealerships ramp up advertising to attract consumers to the showroom using "Cash for Clunkers" as an incentive, the Automotive Aftermarket Industry Association (AAIA) anticipates a consumer backlash once reality replaces the hype.
"It wouldn't surprise me if there is a consumer backlash once car owners realize that 'Cash for Clunkers' is nothing more than a clever slogan for a program to spend $1 billion of our tax dollars to fund a government subsidized vehicle trade-in to help new car dealers sell cars," said Kathleen Schmatz, AAIA president and CEO. "Consumers will soon learn that they are simply trading in their vehicle and will still have to jump through all of the hoops to qualify for and purchase a new vehicle."
The much heralded fuel efficiency and environmental benefits of purchasing a new vehicle could easily be achieved through better maintenance of an existing vehicle or trading up to a newer used vehicle, according to AAIA. Any savings from improved miles per gallon will be lost from the costs involved in destroying and disposing of the "clunkers."
AAIA has strongly opposed "Cash for Clunkers" that prematurely destroys vehicles and their valuable parts and components. "Destroying vehicles with many more years of life denies consumers more affordable used vehicles and pulls vehicles from the aftermarket supply chain," said Schmatz.
The Consumer Allowance Rebate System, the official name for "Cash for Clunkers," offers vouchers up to $4,500 to new car dealerships for consumers who trade-in their vehicle for a new, more fuel-efficient vehicle.
About AAIA
AAIA is a Bethesda, Md.-based association whose more than 23,000 member and affiliates manufacture, distribute and sell motor vehicle parts, accessories, service, tool, equipment, materials and supplies. Through its membership, AAIA represents more than 100,000 repair shops, parts stores and distribution outlets.
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Reader Comments (Page 1 of 4)
Bigfork 6:30PM (7/29/2009)
7-days after trade-in? Didn't Hyundai already take in a lot of cars already? I don't remember the details but I hope Hyundai just loaned them the $4500 and didn't actually take ownership of the trade-ins yet or this won't work very well.
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Kumar 10:20AM (7/25/2009)
The program officially starts this Monday, so they'll have 7 days from then to file. What they and other dealers so for have been doing is gambling that they guessed the final rules correctly.
KT 3:12PM (7/25/2009)
I'm sure those Hyundai dealers are screwed because there's no way they were able to anticipate and follow all the rules. Basically, they just gave everyone a $4500 rebate on the car they purchased. I bet they don't get half that money back from the gov.
Most dealers I've spoke to don't anticipate a lot of new car sales from this. On the other hand they believe it will help used sales.
derek 4:34PM (7/25/2009)
You know what I find funny: OBAMA's new CAFE standards call for all cars by 2012 to be atleast 35mpg or better...
...while moronic people will buy new, more efficient cars...
...we will continue to drive our beautiful muscle/sports cars, PROUDLY.
mikebarba2z 1:15PM (7/31/2009)
Just wanted to let you know of my recent ordeal. Last Saturday I went to a local dealer to find out if I qulify, they said yes. On Sunday, MN law, dealers are closed. So on Monday I returned with the paperwork. Found out I was missing a couple months of insurance cards, but had insurance cards from back in pre-2000 with same policy number, that wasn't good enough,so my agent faxed a letter. Then I was told I'm on a waiting list to get accepted. On Tues. I was contacted to return to select a vehicle and make a deposit. This added my vehicle to a list of others with "SOLD" and a date put on. On Thurs. I was called back to the dealer for the next step. Which I'm not very happy about at this time. I was told my clunker has to be destroyed first. So there seems to be no guarentee to my current problem. The dealer has taken my old vehicle and title with plans to destoy to recieve the federal money, then the dealer will contact me to come pick up my new purchase. In the meantime, I no longer have my old vehicle or my new one either. Both are sitting at the dealer. I have signed my purchase agreement and everything but have no car to show for it. They were nice enough to offer me a ride home as I now have neither vehicle to use. So I wait. The dealer wants to ensure they get the money first. So now I hear they may be out of money already and I will propably be out of a car or have to pay the $4,500 myself if I can get my new purchase in the end. So as you see a seven day ordeal has somewhat turned into a big headache for me. The dealer said today they are confident this will happen yet, but don't know when.
Venom 9:32AM (7/25/2009)
As I said before and I will reiterate it again, on face value this program is good.
However as I said before I have been tracking a few cars that I was interested in for the last few months in the newspaper flyers.
Their prices have remained constant, same model year, same models exactly etc.
All of a sudden last month these same cars jumped in price in the ads by almost $5,000 in some cases. I was a little shocked at these cars were getting older and the new models were supposed to come out.
The only conclusion I could come to was that these unscrupulous dealers (GM) were basically trying to make a fat extra profit using the Cash for Clunkers program.
No wonder these guys are almost out of business.
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British_Rover 9:53AM (7/25/2009)
What part of the country are you in and what specific cars are you looking for? I work for a large family owned autogroup with eight separate franchises and seven separate brands. Prices around here have been going down steadily as the manufactures continue to increase incentives. We have a couple of models that this month the factory doubled or more then doubled the incentives from the month before.
Just go look at other dealers if the ones around you are trying to screw you or actually call a dealer and ask for a quote on a specific car.
Zaxxis 12:57PM (7/25/2009)
Please give specifics, otherwise your generalization just reeks of being a troll.
I just bought a Mazda3 and I too have been following car prices for the last 2 months and they are certainly going down.
It's still a free market. Any dealer that raises their prices thinking they could get a tidy profit, will lose out to a nearby dealer that isn't.
mab 9:36AM (7/25/2009)
This is really a way for the dealers to make fools of customers who dont read up and learn all the rules of this law.
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British_Rover 10:05AM (7/25/2009)
It is a $10,000 penalty if you break the rules of the program. Lets repeat that again $10,000 penalty.
Do you know how long it would take a typical new car dealer to make up one $10,000 fine in new car sales? Short answer is forever because no one, but the truly high dollar exotics, make money on new car sales anymore. You lose money on every new car you sell but hopefully you get a nice trade that you can make a little money selling and as long as your sales customers come back for service you make money there.
Leclerc 2:31PM (7/25/2009)
Wrong, read again. The penalties to the dealers are $15,000 per occurence.
British_Rover 4:53PM (7/25/2009)
Great $15,000 then that just proves my point even more. No dealer is going to risk screwing up even one deal by even one penny if they are facing a $15,000 penalty.
sk 9:46AM (7/25/2009)
Aww great... I planned on turning my old van in but its rated at 19mpg. I guess I'm out of luck.
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jmanlives 10:56AM (7/25/2009)
Same! My 96' Acura RL gets 19. UGH. I have to keep my 14 year old clunker.
AndrewNoNumbers 10:08PM (7/25/2009)
Same with a 19MPG 99 Plymouth.
Bobmarley 9:44AM (7/27/2009)
I average 21mpg's in my 98 4Runner (all highway))....but fueleconomy.gov rates it at 17mpg's!
Thunderdome 10:10AM (7/25/2009)
I'm fully ready for the local dealers to try desperately to use the C-4-C rebates to offset their own rebates. You give 'em an inch, they take a foot. I'm planning on not mentioning anything about a trade-in before all the other negotiations have been taken care of.
And what's this about adding $$$$ to the trade-in if it has scrap value? Every car has scrap value. How does one figure out how much scrap value his car has? What's kind of price would a 1990 BMW 525i have in scrap?
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Kumar 10:18AM (7/25/2009)
I imagine scrap value varies from dealer to dealer, depending on who they are selling the scrapped cars to. I did read that the dealers are allowed to keep up to $50 of that, so I don't see a reason for them to be dishonest on the true scrap value.
So is it acceptable to take your car to the scrap yard ahead of time and sell them every seat but the driver seat, as well as any other parts that aren't necessary for safety/regulations, which will allow you to drive to the dealer? ;)
I'm thinking, sell the spare, right side mirror, air conditioner compressor, air bags, and you could make a little cash on the side.
Leclerc 3:45PM (7/25/2009)
Dude, stop whining. If you love your 90 BMW so much see if you can sell that sled and get more than $4,500. Are you paid to whine? Oh that's right, if you did you wouldn't be griping about a couple of hundred dollars because you would be independently wealthy.
Kyle Swift 10:25AM (7/25/2009)
This scrap value thing is interesting. In TX, the dealer I'm working with is claiming that there is NO additional money added to the CFC rebate I am getting on the car. However, in PA, my father just informed me on that the dealers are only keeping $50 of the scrap value.
Seems like they are already going against the rules.
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