Up to $4,500 off a new car or truck. Plus any dealer or factory incentives. Plus whatever salvage you can get for most parts of your old clunker.
The federal government’s still tinkering with the rules for its “cash for clunkers” program. But area dealers and buyers hope that after it gets under way this week, the program proves to be a good enough deal to spur sales of new vehicles and get some old polluters off the road.
“We’re hoping it takes off,” said Grant Trier of Trier Ford Lincoln Mercury in Columbia City. “We’re guessing the smaller four-cylinders will really take off.”
President Obama signed the Consumer Assistance Recycle and Save Act of 2009 into law June 24. The final rules are due out Thursday.
Like similar efforts in Germany and elsewhere in Europe, the law is intended to stimulate sales of new vehicles. It puts up $1 billion in federal funds, which administration officials hope will prompt the sale of about 250,000 new cars and trucks by the time the program expires Nov. 1.
But unlike similar programs in Europe, the U.S. version of “cash for clunkers” purports to help the environment.
To qualify, your old vehicle can have a combined fuel economy of no more than 18 miles per gallon.
If you buy a new car, it has to get at least 22 mpg and be at least a 4 mpg improvement over your clunker. For that, you get a $3,500 credit. If the new car represents at least a 10 mpg improvement, you get a $4,500 credit.
If you swap out your clunker for a truck, SUV or minivan, the new vehicle must get at least 18 mpg and be a 2 mpg improvement over your clunker. For that, you get $3,500. If it’s a 5 mpg improvement, you get $4,500.
Germany’s version of cash for clunkers boosted February auto sales by more than 20 percent, the Wall Street Journal reported.
Environmentalists have criticized the U.S. program, saying the mileage benefits are marginal, while 10 percent of a new vehicle’s energy footprint comes during its manufacture.
In other words, the net effect of the program might be to burn more energy than is saved.
And some economists have said the environmental and other restrictions are likely to limit the number of new vehicles it sells.
“The devil is in the details,” said Arthur Wheaton, an auto industry expert at Cornell University’s Buffalo, N.Y., campus. “A lot of people are not going to qualify.”
And among those who do, how many people driving a car worth $3,500 or less want to take on a payment for a new car or truck, even if it is discounted?
Kevin Day of Fort Wayne certainly doesn’t. He’s asking $1,800 for his 1997 Chrysler Concorde with 131,000 miles.
“I’ve got two other vehicles,” Day said. “The last thing I want right now is more debt.”
But there is a market for the incentives, Trier said; for example, some families might have an aging third vehicle they’re ready to exchange.
Mike Hamm of Fort Wayne wishes the program had been enacted sooner.
“I just bought a new car,” he said.
Hamm’s asking $2,200 for his 1999 Dodge Caravan with a combined fuel economy of 18 mpg. But in June, he bought a Chrysler Town and Country with a combined fuel economy of 20 mpg.
Chrysler LLP in June was offering incentives of up to $4,000, and Hamm said he found them irresistible.
But Trier said under the cash for clunkers program, car buyers also are eligible for other incentives.
And while they won’t get any money for a trade-in, buyers will get whatever salvage value their old vehicles have. Cash for clunkers requires that drive trains of old vehicles be destroyed and that the price the salvage yard pays for the rest of the vehicle be passed along to the customer, Trier said.
Cash for clunkers also is expected to have a less tangible benefit.
“This is a flat-out incentive to drive traffic into the GM, Chrysler and Ford dealerships,” said Wheaton, the Cornell faculty member.
“Even if it doesn’t sell 250,000 vehicles, if it gets 500,000 people to go shopping, it’s big.”
Under the program, people can cash in their clunkers for vehicles made by foreign-owned companies, but Wheaton said the goal is to stimulate sales by American-owned companies, which have been struggling.
GM’s June sales were down 33 percent over June 2008. Chrysler’s were down 42 percent. Ford’s were down 11 percent.
If driving people into showrooms is a goal of “cash for clunkers,” it’s already succeeding, said Jim Kelley, general manager of Tom Kelley Cadillac Saab Hummer. The dealership is part of the Kelley Automotive Group, one of the biggest dealer chains in Indiana.
“We’ve probably had 10 people ask about it in the past 30 days,” Kelley said, adding that other dealerships in the group have also received inquiries.
“It’s a welcome thing,” Kelley said.
