Understanding Cash For Clunkers

CASH FOR CLUNKERS

Cash for Clunkers scheme or Car Allowance Rebate System (CARS) ended recently on 24^th Aug 2009. The scheme provided benefits to US residents to purchase a new more fuel efficient vehicle in place of their old vehicle. The scheme provided stimulus to the economy by boosting auto sales and putting more fuel efficient vehicles on roads. The programme was allocated a limited period fro 1^st July 2009 to 24^th Aug 2009.

Fed started passing vouchers to Car dealers under the Consumer Assistance Recycle and Save Act of 2009, how much beneficial or cumbersome? the act is a matter of discussion.

Consumer Assistance To Recycle And Save Program (CARS) Act 2009:

CARS Act authorizes issue of an electronic voucher to the US residents subject to specifications. All the registered dealers will get the said vouchers as the partial payment of the purchase or lease made by them offered for sale by that dealer of new fuel efficient vehicle. However, their are qualifications that need to be fulfilled if the person wants to get the pre-defined sum of money ($ 3500 or $ 4500) from the US government. If the new fuel efficient automobile is a passenger vehicle, or truck than the person is eligible of a voucher of $ 3500 or $ 4500 voucher based on the fuel efficiency of the vehicles.

A voucher issued under the Program is used only in connection with the purchase or qualifying lease of new fuel efficient automobiles that occur between 1^st July 2009 and 24^th Aug 2009. Vehicles must be less than 25 years old and must be insured and registered. The vehicle which comes for trade in must be scrapped and the value of scrap and the rebate must be offered to the customer. The new vehicle bought by the customer should have a retail price of not more than $ 45000 and a combined fuel economy value of 22 mpg.

Assistance For The Auto Sector:

Cash for clunkers scheme which transformed the way of cars sale ended on 24th Aug 2009. The popular Cash-for-Clunkers program generated sales of nearly 490,000 vehicles in the U.S., worth more than 2 billion dollars. Car sales in July were the highest since August 2008 and up 13 percent over June. Higher sales from the program assisted producers start idled capacity of production units. The main focus of the scheme was to remove the polluting vehicles from the roads and bringing more fuel efficient vehicles. The other focus of the scheme was to revive the ailing manufacturing and automobile sector. The scheme was allocated a budget of $ 1 billion between 1st July 2009 and 24th Aug 2009 but with good response from the customers the some was exhausted on 30th July 2009 only. A additional sum of $ 2 billion was allocated after that.

How Far It Is A Viable Scheme?

Industry people have different views about the Cash for Clunkers scheme. While most of them are in favor of the scheme saying that it did an outstanding job in reviving the economy, the others believe that it used the tax payer’s money first to bailout the auto sector and then the government used it to throw it in a buy-buy economy. Temporarily it has helped the sales of new after the bailout companies. GM is expected to rehire more than 1300 laid-off workers, Hyundai is bringing 3000 workers back to an Alabama plant, and automakers are paying workers overtime to meet the demand.