'Cash for clunkers' bill passes Senate; car dealers cheer
After the bill is signed, the National Highway Traffic Safety Administration will finalize the rules in 30 days and then consumers may be eligible for a voucher worth up to $4,500 to be spent on a new car. The amount of the voucher will depend on the fuel efficiency of the new car and the increased efficiency compared to the old one.
Eligible trade-in vehicles must be 1984 models or newer and must have an average fuel economy of no more than 18 miles to the gallon. The new car or truck must get better gas mileage than the one traded in. The amount of the voucher depends on the difference in fuel efficiencies between the old and new car. For example, to get the maximum $4,500 voucher the new car would have to get at least 10 more miles per gallon than the old car. If the new car gets at least four miles per gallon more, the voucher amount is $3,500.
Automotive trade groups have been lobbying for months to get the legislation passed. The bill sponsors tacked it onto legislation for a spending bill to fund troops in Iraq and Afghanistan in order to expedite it through the Senate. It had already passed the House of Representatives.
Republican Sen. Judd Gregg tried to strip the measure from the bill. He said during floor debate, "Let's not add a billion dollars of unnecessary debt." Senator Carl Levin (D-Mich) said the program "will provide a much-needed boost to the automobile industry."
A similar program helped beef up Germany's car sales. At the end of the first month of the program in Germany, sales were up 21 percent from the previous year. During that same period, U.S. sales slumped 41 percent.
In other good news, GM told 60 of the 1,000 dealers slated for elimination that they would not lose their dealerships. GM announced the reversals after it corrected financial information used to evaluate which stores to keep. GM did not name the individual dealerships that would saved.
Lita Epstein has written 25 books including Trading for Dummies and Reading Financial Reports for Dummies.