US Launches Car Trade-in Program Cash for Clunkers
Last Friday, the U.S. government launched a cash incentive program to increase auto sales. The $1 billion program, which will be called Cash for Clunkers is designed to encourage drivers to trade in their gas guzzlers for more fuel-efficient cars. Drivers can receive up to $4500 in rebates.
After billions of dollars were given out to bail out such auto manufacturers as General Motors and Chrysler Group, the government approved this program in order to help the car industry at large. Officials expect that the program will increase American car sales by 20,000 units, which equals about 12 new sales for each car dealership in the United States. It will also encourage drivers who have leased their cars to start buying vehicles instead.
However, the terms that define “efficiency†are narrow, so that the program will also aid companies like GM and Ford, who make most of their money from selling pick-up trucks and sport utility vehicles. The trade-ins are also required to get less than 18 miles per gallon and they cannot be more than 25 years old. Only models earlier than 2001 will be eligible, and they must adhere to certain auto insurance criteria.
The program will be regulated by the Transportation Department, but many car dealers and manufacturers are independently offering other incentive programs to help increase sales. For example, Chrysler is planning to match any government-awarded rebate dollar for dollar. The US government believes that this program will so successful that they are considering additional funding.
