Despite concerns over growing opposition, the U.S. Senate approved legislation on Thursday that will provide $1 billion in support of a "cash-for-clunkers" vehicle trade-in program that is expected to spur about 250,000 new vehicle sales.
The legislation was attached to a $106-billion war spending bill that was widely expected to pass, regardless of resistance from some senators concerned that the cash-for-clunkers plan is wasteful. If signed into law by President Barack Obama, the government will have 30 days to iron out the details.
The general layout of the program is already known. In order to be eligible for trade-in, vehicles must have been manufactured in model year 1984 or later, have a combined fuel economy rating of 18 miles-per-gallon or less and be in drivable condition. In addition, trade-in vehicles must have been insured by the same owner for at least a year prior to the trade-in date. Only new vehicles are eligible, and the manufacturer's suggested retail price must be $45,000 or less. Both import and domestic vehicles are eligible.
How much the vouchers will be worth depends upon the fuel economy of both the trade-in and new vehicles. For passenger cars, the new vehicle has to get 4 mpg better than the trade-in and at least 22 mpg in the combined cycle to qualify for a $3500 voucher. If the new car gets 10 mpg better than the trade-in, the voucher is worth $4500.
For small light trucks and SUVs, the new vehicle has to get 2 mpg better than the trade-in and at least 18 mpg overall for a $3500 voucher. If the new vehicle gets 5 mpg more than the old vehicle, the voucher is worth $4500.
Large, light-duty truck and van trade-ins, which includes trucks and vans that weigh between 6000 and 8500 pounds, are eligible for a $3500 voucher if the new vehicle gets at least 1 mpg more and at least 15 mpg overall. New vehicles that get 2 mpg more than the trade-in will be eligible for $4500 vouchers. Any pre-2002 work truck, defined by the legislation as a pickup or cargo van weighing between 8500 and 10,000 pounds, is eligible to be traded in for a new truck in the same or smaller weight class for $3500.
Until the government finalizes how it will run program - probably through dealers - it's unknown when consumers will be able to apply for the vouchers. Funding for the program will expire on November 1, though the funds are likely to be completely used up by that time.
Source: The Detroit Free Press