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Following months of contentious debate, Congress passed ‘cash for clunkers’ legislation which President Obama then signed into law. The new law includes two SEMA provisions to help lessen the program’s potential impact on the automotive aftermarket and collectors.
The provisions exclude vehicles 25-years old and older from the scrappage program and expand parts recycling opportunities. While lawmakers intended the program to last about one-year, they were only able to provide $1 billion in funds through the end of October 2009. Lawmakers will pursue another $3 billion later this summer to fund the program into 2010.
Vehicle Scrappage Program Highlights
- General: Consumers may voluntarily trade in their older vehicles and receive vouchers worth up to $4,500 toward the purchase or qualified lease of a new, more fuel-efficient car or truck.
- Trade-in Vehicle: Must be model year 1984 or newer, in drivable condition and continuously insured and registered to the same owner for at least one year. Eligible cars and trucks must have a fuel-economy value of 18 mpg or less. Work trucks must be built before 2002. The mpg values are EPA combined city/highway ratings: www.fueleconomy.gov
- New Vehicle: Consumers will receive a $3,500 voucher if they buy a new passenger car that was rated at 4 mpg higher than the older vehicle, or a new pickup truck/SUV that was at least 2 mpg higher than the old truck (1 mpg for heavy-duty trucks/vans). They will receive a $4,500 if the passenger car was at least 10 mpg higher and the truck/SUV was at least 5 mpg higher (2 mpg for heavy-duty trucks/vans). The new vehicle must have a manufacturer's suggested retail price of less than $45,000.
- Duration: Lawmakers authorized $1 billion to issue vouchers towards the purchase or qualifying lease of a new vehicle made between July 1–November 1, 2009. Later this summer, lawmakers are expected to authorize another $3 billion to extend the program into 2010. Lawmakers estimate that the scaled-back version will spur 150,000 car sales and a $4 billion program would net 600,000 sales.
- Regulations: It will likely take the National Highway Traffic Safety Administration (NHTSA) several weeks to issue regulations outlining how dealers will be reimbursed for vouchers and other program details. The NHTSA will work with the EPA to compile a comprehensive list of eligible trade-in vehicles, by make and model, to be posted on the Internet and made available through other means.
Questions? Contact Stuart Gosswein.