"Cash for clunkers" revived as CARS Act

A new "cash for clunkers" bill has been introduced in the House to help stimulate sagging auto sales and boost fuel economy of the national vehicle fleet, the Consumer Assistance to Recycle and Save (CARS) Act.

The bill, introduced by Representative Betty Sutton (D-Ohio) and co-sponsored by Representatives Bruce Braley (D-IA), John Dingell (D-MI), and Candice Miller (R-MI), would provide tax incentives of between $3,000 and $5,000, or mass transit voucher, to consumers who trade in vehicles at least eight years old for ones that get better fuel economy. The size and availability of the incentive would depend on its fuel economy and where it was built. (There is also a provision for $7,500 for a vehicle assembled in the United States and achieves 100 mpg–essentially requiring an electrified powertrain.) The CARS Act offer could be used only once per consumer.

The program would only apply to vehicles assembled in North America. The fuel economy targets to receive a $4,000 voucher would be lower for cars built in the U.S. than in Canada or Mexico: 27 mpg vs. 30 mpg. Trucks would have to return 24 mpg highway to receive the same amount. Passenger cars assembled in the United State would be eligible for $5,000 if they could meet the 30 mpg highway  

Incentives would be limited to cars that cost less than $35,000, and it would require that the old trade-in vehicle be scrapped, not resold.

A similar measure in Germany has spurred automotive sales, with the country showing a 21-percent rise in February, compared against the same month in 2008, according to Sutton.

While Detroit automakers, car dealers, and UAW workers have lined up behind the bill, some import automakers have expressed opposition. Collector-car hobbyists and the aftermarket industry have also opposed previous clunkers legislation.  For more information on the Cash for clunkers program, see our guide.

—Eric Evarts