WASHINGTON (June 19, 2009)—The Senate has approved a $1 billion “cash for clunkers” program to encourage U.S. consumers to buy new, fuel-efficient vehicles. The measure passed as an amendment to a $106 billion funding bill for troops in Iraq and Afghanistan.
If President Obama signs the bill as expected, the National Highway Traffic Safety Administration will have 30 days to work out the law's details. The voucher program established by the bill is expected to be up and running by early August and apply to vehicle purchases made between July 1 and Nov. 1 of this year.
As originally proposed in the House, the Senate bill will make car buyers eligible for a $3,500 voucher if they trade in a vehicle with fuel mileage of 18 mpg or less for one getting at least 22 mpg. The voucher increases to $4,500 if the new vehicle's fuel mileage is at least 10 mpg above the old one.
Auto makers and auto workers enthusiastically support the measure. Dave McCurdy, president and CEO of the Alliance of Automobile Manufacturers, cited the success of a similar program in Germany in a letter to Senate Majority Leader Harry Reid, D-Nev. New car sales in Germany rose 21 percent in the first month of the program over the same month in 2008, whereas vehicle sales in the U.S. fell 41 percent during the same period, McCurdy said.
Representatives of the auto aftermarket and the auto repair industries, however, are concerned the program will take sound, useful vehicles off the road and cause harm to their businesses without any appreciable energy or environmental benefit in compensation. They fought unsuccessfully for a provision in the bill to allow vouchers to pay for repairing or retrofitting older vehicles as an alternative to junking them.
Groups such as the Specialty Equipment Market Association, however, are grateful to the bill's sponsors for adding provisions exempting vehicles 25 years old or older from the program and allowing drive train parts from older vehicles to be recycled and resold.