House Passes 'Cash for Clunkers' Bill

Associated Press

WASHINGTON--The House passed a plan to boost auto sales by providing vouchers of up to $4,500 for consumers who turn in their gas-guzzling cars and trucks for more fuel-efficient vehicles.
The House bill, which passed by 298 votes to 119, is aimed at stimulating car sales during a bleak period for the auto industry and increasing the nation's fleet of cars that get more miles to the gallon.
General Motors Corp. and Chrysler LLC have received billions of dollars in government aid and the entire auto industry has watched car sales plummet during the past year. In May, overall sales were 34% lower than a year ago.
"Our industry has been stuck in neutral and really has not started to move,'' said Larry Kull, president of Marlton, N.J.-based Burns Kull Automotive Group, which includes General Motors, Honda and Toyota dealerships.
President Barack Obama has urged Congress to approve consumer incentives for new car purchases as part of the government's efforts to reorganize General Motors and Chrysler through the bankruptcy courts.
The vehicle scrappage bill has been under negotiations for months as lawmakers try to find a solution that boosts car sales while providing some environmental benefits. Proponents have pointed to similar programs in Europe that have enhanced auto sales.
Analysts said the bill, which has not yet been considered by the Senate, would encourage car shoppers but would not be a panacea for carmakers. The U.S. industry is expected to generate about 9.5 million vehicles sales in 2009, compared to more than 13 million in 2008 and more than 16 million in 2007.
Auto analysts questioned whether it would be enough of an incentive for many consumers burdened by debt or financially stressed by the troubled economy.
Separately, House and Senate appropriators were discussing providing $1 billion to a supplemental war funding bill for the "cash for clunkers'' program, which aims to generate about one million new auto sales. Since the yearlong vehicle program is expected to cost $4 billion, lawmakers would attempt to find the additional money later this year.
Under the House bill, car owners could get a voucher worth $3,500 if they traded in a vehicle getting 18 miles per gallon or less for one getting at least 22 miles per gallon. The value of the voucher would grow to $4,500 if the mileage of the new car is 10 mpg higher than the old vehicle. The miles per gallon figures are listed on the window sticker.
Owners of sport-utility vehicles, pickup trucks or minivans that get 18 mpg or less could receive a voucher for $3,500 if their new truck or SUV is at least 2 mpg higher than their old vehicle. The voucher would increase to $4,500 if the mileage of the new truck or SUV is at least 5 mpg higher than the older vehicle. Consumers could also receive vouchers for leased vehicles.
Rep. Betty Sutton (D., Ohio), the bill's chief sponsor, said the bill showed that "the multiple goals of helping consumers purchase more fuel efficient vehicles, improving our environment and boosting auto sales can be achieved.'' Sen. Debbie Stabenow (D., Mich.), has backed a similar version in the Senate, which has the support of automakers and their unions.
The bill would direct dealers to ensure that the older vehicles are crushed or shredded to get the clunkers off the road. It was intended to help replace older vehicles--built in model year 1984 or later--and would not make financial sense for consumers owning an older car with a trade-in value greater than $3,500 or $4,500.
Copyright © 2009 Associated Press