It’s been announced that the extremely popular Cash for Clunkers trade-in program will be continued after more funding was obtained to pay for the credits. The Cash for Clunkers program was suspended on July 31 because of a concern that the funding limit ($950 million) might have already been reached. The original program was intended to run until the money was used up or November 1, 2009 – whichever came first.
[edit Dec 9 - Cash for Remodeling]
From Fox news:
The House passed emergency legislation Friday approving an additional $2 billion for the “cash for clunkers” program, whose immediate popularity this week threatened to sink the fledgling program.
Skipping over regular procedure to obtain an immediate floor vote, House Democrats’ presented a bill that would shuffle around funds from the Recovery and Reinvestment Act, an emergency stimulus for the original $1 billion budget for rebates on new cars that lawmakers worried had been exhausted in only a week. The bill passed 316-109.
The idea behind the Cash for Clunkers program is that someone buying a new car can get a large credit ($3500 or $4500) if they trade in their old car and it meets the Cash for Clunkers qualification guidelines. Basically the old car has to get less than 18 mpg and the new car has to get at least 22 mpg.
From Fox News
It was unclear how many cars had been sold under the program. Sen. Debbie Stabenow, D-Mich., said about 40,000 vehicle sales had been completed through the program but dealers estimated they were trying to complete transactions on another 200,000 vehicles, putting the amount of remaining funding in doubt.
This program was very popular for a rather obvious reason – the government was giving a good chunk of money away if you were buying a new car and had an eligible old car to trade in. Like any stimulus effort, it’s very difficult to determine how effective this new car credit will be. It’s fairly certain however that the auto industry will be a major beneficiary of the stimulus especially with the new funding. Recent years saw a domestic car market of about 16 million cars per year. This year was projected to be only about 10 million cars so if this stimulus can get another million cars sold then that will help the car companies…who conveniently enough are owned by the government.