VH_Supra26
05-15-2009, 09:56 PM
by Nelson Ireson
http://www.motorauthority.com/content/thumbs/2/0/2001_chevy_monte_carlo_main_630-0304-630x360.jpg
The new plan could see old, polluting cars stripped off the road - and then put right back on it
Reports emerged last week from Washington that the U.S. Congress and President Obama had reached an agreement on how to implement a 'cash for clunkers' program, and it has just passed the House of Representatives this week. The plan would offer a $3,500 voucher for cars traded in under the plan, valid on a new car rated 22mpg or higher. But now critics are saying the program won't actually get any of those clunkers off the streets due to a loophole.
The problem lies in how the bill plans to get rid of the clunkers - salvage auctions. Presumably that would lead to a short trip to a scrap yard where the cars would be sold for their component materials, never to see that road again. But 35 U.S. states allow regular citizens to attend those salvage auctions, and all of the cars processed in those states under the plan could, at least in theory, end up right back on the road - often for less cost than the value of the incentive they earned for the original seller.
That not only puts polluting cars back on the streets, it opens the door to fraud, says the Automotive Recycler's Association. "Once again, Congress' haste to act in these difficult economic times are leading to whole array of unintended consequences," says Automotive Recyclers Association's executive vice president Michael E. Wilson. "This has been circulating around the back halls of Congress for months. What is truly needed is a full public review of what is actually in the bill."
Proponents of the bill are still pushing it forward due to its potential to help boost the economy, and that auto industry. In some places, like Germany, it has worked miracles. But the U.S. is a famously unique market, and it's not clear the system will work here, but it looks like it's going to be given a trial run at the least. Under the plan, a year's worth of funding will be allocated, enough to get about 1 million 'clunkers' off the roads and replaced with newer cars. That means that around $4 billion will be spent on the project.
The plan would have participating individuals receiving a $3,500 voucher for trading in a car rated at less than 18mpg and buying a new car rated at or above 22mpg. The voucher climbs to $4,500 if put toward a car that gets at more than 10mpg better than the car turned in under the program. Unlike earlier plans, the latest compromise plan doesn't require that the new vehicle be purchased from an American-brand manufacturer.
General Motors released a statement on the agreement, saying, "Based on our understanding of the fleet modernization program announced today, GM supports the plan and urges Congress to move forward as quickly as possible to enact such a program for the U.S. market."
Germany's success with the cash for clunkers model has been notable, raising sales about 20% for several months in a row now, seriously bucking the global trend of 30-50% sales losses. Given the much larger volume and different nature of the U.S. market, it's hard to draw direct comparisons, but it will be interesting to see how the program plays out.
GM is hopeful that the plan will work well, however. "Scrappage programs implemented in other countries around the world have proven to be very successful in re-invigorating car and truck sales. The approach of providing vouchers for new vehicle purchases, which is tied to getting older, less efficient vehicles off the road at the same time is a huge win for consumers, the economy and the environment," said the company.
All Content Copyright 2006-2008 Motor Authority
http://www.motorauthority.com/report-congress-president-reach-deal-on-cash-for-clunkers-scheme.html
http://www.motorauthority.com/content/thumbs/2/0/2001_chevy_monte_carlo_main_630-0304-630x360.jpg
The new plan could see old, polluting cars stripped off the road - and then put right back on it
Reports emerged last week from Washington that the U.S. Congress and President Obama had reached an agreement on how to implement a 'cash for clunkers' program, and it has just passed the House of Representatives this week. The plan would offer a $3,500 voucher for cars traded in under the plan, valid on a new car rated 22mpg or higher. But now critics are saying the program won't actually get any of those clunkers off the streets due to a loophole.
The problem lies in how the bill plans to get rid of the clunkers - salvage auctions. Presumably that would lead to a short trip to a scrap yard where the cars would be sold for their component materials, never to see that road again. But 35 U.S. states allow regular citizens to attend those salvage auctions, and all of the cars processed in those states under the plan could, at least in theory, end up right back on the road - often for less cost than the value of the incentive they earned for the original seller.
That not only puts polluting cars back on the streets, it opens the door to fraud, says the Automotive Recycler's Association. "Once again, Congress' haste to act in these difficult economic times are leading to whole array of unintended consequences," says Automotive Recyclers Association's executive vice president Michael E. Wilson. "This has been circulating around the back halls of Congress for months. What is truly needed is a full public review of what is actually in the bill."
Proponents of the bill are still pushing it forward due to its potential to help boost the economy, and that auto industry. In some places, like Germany, it has worked miracles. But the U.S. is a famously unique market, and it's not clear the system will work here, but it looks like it's going to be given a trial run at the least. Under the plan, a year's worth of funding will be allocated, enough to get about 1 million 'clunkers' off the roads and replaced with newer cars. That means that around $4 billion will be spent on the project.
The plan would have participating individuals receiving a $3,500 voucher for trading in a car rated at less than 18mpg and buying a new car rated at or above 22mpg. The voucher climbs to $4,500 if put toward a car that gets at more than 10mpg better than the car turned in under the program. Unlike earlier plans, the latest compromise plan doesn't require that the new vehicle be purchased from an American-brand manufacturer.
General Motors released a statement on the agreement, saying, "Based on our understanding of the fleet modernization program announced today, GM supports the plan and urges Congress to move forward as quickly as possible to enact such a program for the U.S. market."
Germany's success with the cash for clunkers model has been notable, raising sales about 20% for several months in a row now, seriously bucking the global trend of 30-50% sales losses. Given the much larger volume and different nature of the U.S. market, it's hard to draw direct comparisons, but it will be interesting to see how the program plays out.
GM is hopeful that the plan will work well, however. "Scrappage programs implemented in other countries around the world have proven to be very successful in re-invigorating car and truck sales. The approach of providing vouchers for new vehicle purchases, which is tied to getting older, less efficient vehicles off the road at the same time is a huge win for consumers, the economy and the environment," said the company.
All Content Copyright 2006-2008 Motor Authority
http://www.motorauthority.com/report-congress-president-reach-deal-on-cash-for-clunkers-scheme.html