Environmental Protection

CARS Rules in the Making; Edmunds Sees a Stall Out

The National Highway Traffic Safety Administration has been tasked with developing rules for the Car Allowance Rebate System (CARS).

According to the Web site, there are five important things consumers should know:

  • Your vehicle must be less than 25 years old on the trade-in date.
  • Only purchase or lease of new vehicles qualify.
  • Generally, trade-in vehicles must get 18 or less mpg (some very large pick-up trucks and cargo vans have different requirements).
  • Trade-in vehicles must be registered and insured continuously for the full year preceding the trade-in.
  • You don't need a voucher, dealers will apply a credit at purchase. Edmunds.com suggests that the program will struggle to produce the estimated 250,000 vehicle sales. Results will be limited because most qualifying "clunkers" are at least 10 years old. Their owners are either not looking for an increased car payment or cannot afford to purchase a new vehicle, which averages nearly $30,000.
In addition, the one-year requirement is ill considered. Allowing new vehicle buyers to purchase clunkers that would be then traded-in and scrapped would ignite wave of economic activity and still achieve the bills environmental goals.

"Similar legislation has seen success in Europe because European new vehicle buyers keep their vehicle considerably longer than those in the U.S.," said Jeremy Anwyl, chief executive officer of Edmunds.com. "But in the end, this is a non-event. Even 250,000 new vehicles sales will not provide the impact needed for an industry looking for at least five million in additional sales."

"If you can get more than $4,500 for your vehicle, you're better off selling it or trading it in without taking advantage of the Cash for Clunkers rebate," stated Edmunds.com Editor In Chief Karl Brauer, who addresses this topic on his blog, Karl on Cars.

Edmunds.com has compiled a list of "clunkers" whose owners would benefit from pursuing the rebate. The list can be accessed by visiting: http://www.edmunds.com/media/cashforclunkers/vehicles_under_4500.pdf.

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