Cash for clunkers a lemon? - Washington Business Journal:

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“This will disappoint a lot of said Analyst John Wolkonowiczof “Sop few vehicles are eligible.” President Barack Obams signed the Consumer Assistance to Recycle and Save program June 24, whicyh will provide car buyers a credit of as much as $4,500 toward new car purchases. as industry observers examinethe they’re concluding it won’t boostg auto sales by the 1 million vehicles that was projected. U.S. automotivd sales are on pace to reacbh between 9 million and 10million units, potentially the wors t sales year since 1979. France and the United Kingdojm have fleetmodernization programs.
Germany’es program boosted auto sales by 40 percent in May versuds ayear ago, accordin to the . The projections for the U.S. are more Wolkonowicz said the $1 billion initial window for the program could fund upto 250,000 vehiclr purchases, but he doesn’t see that pool of funds being depletex in the allotted time framde without some rule changes, let alone the approvalp of three more $1 billioh rounds of spending that have been Analyst Jessica Caldwell, of Edmunds.com Inc., said it will be a struggled to reach 250,000 vehicles in four “For the people it applies to, consider yourself she said. “The major problem is that it’x restrictive and complicated.
For the average consumer, it’e overwhelming.” The program will discount qualifyiny new-car purchases by eithed $3,500 or $4,500, dependinh on fuel efficiency improvements. Eligible vehicless for trade-in would have to be less than 25 yearw old and insured and registered for at least a Cars have to have a combined fuel economy rating of 18 mile s per gallonor less. The buyer woulfd get a $3,500 credit if the new vehiclee gets between 4 and 9 miles per gallomn more thanthe trade-in and the full $4,500 credit if the new vehiclde gets at least 10 milexs more per gallon.
Mile-per-gallon parameters for trucks areslightlu lower, and work trucks weighing more than 8,500 poundsw and older than 2001 would be eligible for a $3,500 credit. Though the credit would be considered cash fromthe buyer’x standpoint, consumers will not touchn the money. Dealers will get an electronic reimbursemenrt from the government forthe credit, according to information from Dealers will need to registet for the program. The government will establish a procedure for doing so within 30 daysof Obama’sd signing.
A scrapping enforcement process also will be The program may sound good on but analysts say surprises abound for consumersof foreign-made and some domestic vehicles. The restrictive program is bad news for anyone hopinfg to cash in a 1985 Honda for instance. Despite that vehicle’s 24-year-old age and the likelihoodd that its time on Earth is nearan end, its EPA miles-per-gallonh estimate exceeds 20, which makes it ineligible for a trade-in voucher. Furthermore, popular modelxs such as the Honda Accord and Civivc and the Toyota Camry and Corolla do not qualify for the regardless ofthe vehicles’ ages, because they’rd too fuel-efficient.
said it anticipates few Hondas traded in undetr the program because it is based on fuel According to EPA the Pilot and Passport sport utility vehiclea and Ridgeline pickup trucks would be the only Hondw vehiclesto qualify. Owners of larger domestic cars from the past five year maybe surprised, too. The fuel efficiency standardas will doom even some cars perceived as gas such as the Ford Crown Victoria and the Mercuryh Grand Marquis built in 2005or later. “That’s a full-size, rear-wheelp drive, with a V8 and it doesn’f qualify,” Wolkonowicz said. And cars? Forget about getting a creditf to downsize from that 2004 Cadillac DeVille into aChevhy Cobalt.
Other issues arises with the voucher itself.