Car Allowance Rebate System - AbsoluteAstronomy.com

The Car Allowance Rebate System (CARS), colloquially known as "Cash for Clunkers", was a $3 billion

1000000000 (number)

1,000,000,000 is the natural number following 999,999,999 and preceding 1,000,000,001.In scientific notation, it is written as 109....

U.S. federal

Federal government of the United States

The federal government of the United States is the national government of the constitutional republic of fifty states that is the United States of America. The federal government comprises three distinct branches of government: a legislative, an executive and a judiciary. These branches and...

scrappage program

Scrappage program

A scrappage program is a government budget program to promote the replacement of old vehicles with modern vehicles. Scrappage programs generally have the dual aim of stimulating the automobile industry and removing inefficient, high emissions vehicles from the road...

intended to provide economic incentives to U.S. residents to purchase a new, more fuel-efficient vehicle when trading in a less fuel-efficient vehicle. The program was promoted as providing stimulus to the economy by boosting auto sales, while putting safer, cleaner and more fuel-efficient vehicles on the roadways.

Although the program officially started on July 1, 2009, the processing of claims did not begin until July 24, and the program ended on August 24, as the appropriated resources were exhausted. The deadline for dealers to submit applications was August 25. According to estimates of the Department of Transportation, the initial $1 billion appropriated for the system was exhausted by July 30, 2009, well before the anticipated end date of November 1, 2009, due to very high demand. In response, Congress approved an additional $2 billion.

On August 26 the DoT reported that the program resulted in 690,114 dealer transactions submitted requesting a total of $2.877 billion in rebates. At the end of the program Toyota accounted for 19.4 % of sales, followed by General Motors

General Motors

General Motors Company , commonly known as GM, formerly incorporated as General Motors Corporation, is an American multinational automotive corporation headquartered in Detroit, Michigan and the world's second-largest automaker in 2010...

with 17.6 %, Ford

Ford Motor Company

Ford Motor Company is an American multinational automaker based in Dearborn, Michigan, a suburb of Detroit. The automaker was founded by Henry Ford and incorporated on June 16, 1903. In addition to the Ford and Lincoln brands, Ford also owns a small stake in Mazda in Japan and Aston Martin in the UK...

with 14.4 %, Honda

Honda

is a Japanese public multinational corporation primarily known as a manufacturer of automobiles and motorcycles.Honda has been the world's largest motorcycle manufacturer since 1959, as well as the world's largest manufacturer of internal combustion engines measured by volume, producing more than...

with 13.0 %, and Nissan with 8.7%. name=DoTfinal/> It led to a gain in market share for Japanese and Korean manufacturers at the expense of American car makers, with only Ford not taking a significant hit. Meanwhile, Japan's own program excluded U.S. cars. The Department of Transportation also reported that the average fuel efficiency

Fuel economy in automobiles

Fuel usage in automobiles refers to the fuel efficiency relationship between distance traveled by an automobile and the amount of fuel consumed....

of trade-ins was 15.8 mpg (miles per gallon), compared to 24.9 mpg for the new cars purchased to replace them, translating to a 58% fuel efficiency improvement.

A study published after the program by researchers at the University of Delaware

University of Delaware

The university is organized into seven colleges:* College of Agriculture and Natural Resources* College of Arts and Sciences* Alfred Lerner College of Business and Economics* College of Earth, Ocean and Environment* College of Education and Human Development...

concluded that for each vehicle trade, the program had a net cost of approximately $2,000, with total costs outweighing all benefits by $1.4 billion. Another study by researchers at the University of Michigan

University of Michigan

The University of Michigan is a public research university located in Ann Arbor, Michigan in the United States. It is the state's oldest university and the flagship campus of the University of Michigan...

found that the program improved the average fuel economy of all vehicles purchased by 0.6 mpg in July 2009 and by 0.7 mpg in August 2009.

Legislative history

Economist Alan Blinder

Alan Blinder

Alan Stuart Blinder is an American economist. He serves at Princeton University as the Gordon S. Rentschler Memorial Professor of Economics and Public Affairs in the Economics Department, Vice Chairman of The Observatory Group, and as co-director of Princeton’s Center for Economic Policy Studies,...

helped popularize the idea of a scrappage program, and the moniker "cash for clunkers", with his July 2008 op-ed piece in the New York Times. Blinder argued that a cash for clunkers program would have a tripartite purpose of helping the environment, stimulating the economy, and reducing economic inequality

Economic inequality

Economic inequality comprises all disparities in the distribution of economic assets and income. The term typically refers to inequality among individuals and groups within a society, but can also refer to inequality among countries. The issue of economic inequality is related to the ideas of...

.

A number of organizations advised Congress in developing the program including ACEEE, CAP Action Fund and SmartTransportation.org.

Jack Hidary of SmartTransportation.org and Bracken Hendricks of the Center for American Progress co-wrote a paper which was distributed to Congressional offices in November 2008 describing the multiple benefits of a cash for clunkers program.

The House

United States House of Representatives

The United States House of Representatives is one of the two Houses of the United States Congress, the bicameral legislature which also includes the Senate.The composition and powers of the House are established in Article One of the Constitution...

approved the creation of a cash for clunkers program with the 298 to 119 passage of the CARS Act ("Consumer Assistance to Recycle and Save Act", H.R. 2751). The House bill, sponsored by Rep. Betty Sutton

Betty Sutton

Betty Sue Sutton is the U.S. Representative for , serving since 2007. She is a member of the Democratic Party.The district includes most of the western and southern suburbs of Cleveland, and includes North Royalton, Akron, Lorain, Elyria, Strongsville, Avon and Cuyahoga Falls.-Early life and...

(D-Ohio

Ohio

Ohio is a Midwestern state in the United States. The 34th largest state by area in the U.S.,it is the 7th‑most populous with over 11.5 million residents, containing several major American cities and seven metropolitan areas with populations of 500,000 or more.The state's capital is Columbus...

), allowed consumers to trade in vehicles with a combined fuel economy of 18 or less for new, more efficient vehicles. In the Senate

United States Senate

The United States Senate is the upper house of the bicameral legislature of the United States, and together with the United States House of Representatives comprises the United States Congress. The composition and powers of the Senate are established in Article One of the U.S. Constitution. Each...

, Debbie Stabenow

Debbie Stabenow

Deborah Ann Greer "Debbie" Stabenow is the junior United States Senator from Michigan and a member of the Democratic Party. Before her election to the U.S. Senate, she was a member of the United States House of Representatives, representing Michigan's 8th congressional district from 1997 to 2001...

(D-Michigan

Michigan

Michigan is a U.S. state located in the Great Lakes Region of the United States of America. The name Michigan is the French form of the Ojibwa word mishigamaa, meaning "large water" or "large lake"....

) and Sam Brownback

Sam Brownback

Samuel Dale "Sam" Brownback is the 46th and current Governor of Kansas. A member of the Republican Party, he served as a U.S. Senator from Kansas from 1996 to 2011, and as a U.S. Representative for Kansas's 2nd congressional district from 1995 to 1996...

(R-Kansas

Kansas

Kansas is a US state located in the Midwestern United States. It is named after the Kansas River which flows through it, which in turn was named after the Kansa Native American tribe, which inhabited the area. The tribe's name is often said to mean "people of the wind" or "people of the south...

) sponsored a bill very similar to the House's.

An alternative bill proposed by Dianne Feinstein

Dianne Feinstein

Dianne Goldman Berman Feinstein is the senior U.S. Senator from California. A member of the Democratic Party, she has served in the Senate since 1992. She also served as 38th Mayor of San Francisco from 1978 to 1988....

(D-California

California

California is a state located on the West Coast of the United States. It is by far the most populous U.S. state, and the third-largest by land area...

), Susan Collins

Susan Collins

Susan Margaret Collins is the junior United States Senator from Maine and a member of the Republican Party. First elected to the Senate in 1996, she is the ranking member of the Senate Committee on Homeland Security and Governmental Affairs...

(R-Maine

Maine

Maine is a state in the New England region of the northeastern United States, bordered by the Atlantic Ocean to the east and south, New Hampshire to the west, and the Canadian provinces of Quebec to the northwest and New Brunswick to the northeast. Maine is both the northernmost and easternmost...

), and Charles Schumer

Charles Schumer

Charles Ellis "Chuck" Schumer is the senior United States Senator from New York and a member of the Democratic Party. First elected in 1998, he defeated three-term Republican incumbent Al D'Amato by a margin of 55%–44%. He was easily re-elected in 2004 by a margin of 71%–24% and in 2010 by a...

(D-New York

New York

New York is a state in the Northeastern region of the United States. It is the nation's third most populous state. New York is bordered by New Jersey and Pennsylvania to the south, and by Connecticut, Massachusetts and Vermont to the east...

) would have had a greater focus on increasing fuel economy. Proponents argued that the alternative bill would lead to 32% more efficiency improvements than the House-Stabenow-Brownback version of the program. The alternative bill would have required that the trade-in vehicle have a fuel economy rating of 17 mpg or less and offered a three-tiered voucher system ranging from $2,500 for a new car that is 7 mpg more efficient than a trade-in to $4,500 for one that is 13 mpg more efficient. Mileage improvement requirements would be less for light and heavy duty trucks. Pre-1999 work trucks would be eligible for the $2,500 voucher regardless of mileage improvements. The alternative bill also gave a $1,000 voucher for the purchase of a more efficient used car; the House bill completely excluded used vehicles.

In the Senate, the "cash for clunkers" legislation was inserted into a larger war supplemental funding bill. Dissenting Senators raised a point of order under Rule 28, which prohibits insertion of provisions not previously passed by either house into conference reports. The rule was overridden with 60 votes, despite some senators, including Sam Brownback, being uncomfortable with a last-minute change that called for the bill's funding to come from "deficit spending" rather than from the stimulus package that was originally agreed upon. The larger funding bill passed by a vote of 91–5 in the Senate.

The Supplemental Appropriations Act, 2009

Supplemental Appropriations Act, 2009

The Supplemental Appropriations Act, 2009 is a United States federal law appropriating public funds for spending in the Iraq War and Afghanistan War during the 2009 fiscal year....

was signed into law with the Consumer Assistance to Recycle and Save Program (C.A.R.S.) as Title XIII. The program received an initial allocation of $1 billion (out of the $4 billion estimated cost) funded by the U.S. government and the program time length was July 1 – November 1. It was implemented by the National Highway Traffic Safety Administration

National Highway Traffic Safety Administration

The National Highway Traffic Safety Administration is an agency of the Executive Branch of the U.S. government, part of the Department of Transportation...

(NHTSA) which had 30 days from the approval of the bill to post all program details online.

In response to the U.S. Department of Transportation estimate that the $1 billion appropriated for the system was almost exhausted by July 30, 2009, due to very high demand, Congress approved an additional $2 billion for the program with the explicit support of the Obama Administration. On July 31, 2009, the House of Representatives approved the extra $2 billion for the program, name=WP0801/> and the Senate approved the extension on August 6, defeating all six amendments presented. President Barack Obama

Barack Obama

Barack Hussein Obama II is the 44th and current President of the United States. He is the first African American to hold the office. Obama previously served as a United States Senator from Illinois, from January 2005 until he resigned following his victory in the 2008 presidential election.Born in...

signed the bill into law on August 7, and the appropriation was exhausted by August 24, 2009.

Eligibility criteria

Vehicle must be less than 25 years old on the trade-in date.
Only the purchase or 5 year minimum lease
Lease
A lease is a contractual arrangement calling for the lessee to pay the lessor for use of an asset. A rental agreement is a lease in which the asset is tangible property...

of new vehicles qualify.
Generally, trade-in vehicles must get a weighted combined average rating of 18 or fewer miles per gallon (some very large pickup truck
Pickup truck
A pickup truck is a light motor vehicle with an open-top rear cargo area .-Definition:...

s and cargo vans have different requirements).
Trade-in vehicles must be registered and insured continuously for the full year preceding the trade-in.
Trade-in vehicles must be in driveable condition.
The program ran from July 1, 2009 until August 24, 2009
The program requires the scrapping of the eligible trade-in vehicle and that the dealer disclose to the customer an estimate of the scrap value of the trade-in. The scrap value, however minimal, will be in addition to the rebate, and not in place of the rebate.
The new car bought under the plan must have a suggested retail price of no more than $45,000, and for passenger automobiles, the new vehicle must have a combined fuel economy value of at least 22 mpg.

Last-minute car ineligibility

According to USA Today
USA Today
USA Today is a national American daily newspaper published by the Gannett Company. It was founded by Al Neuharth. The newspaper vies with The Wall Street Journal for the position of having the widest circulation of any newspaper in the United States, something it previously held since 2003...

, the U.S. Environmental Protection Agency (EPA) revised its mileage estimate list just before the start of the Car Allowance Rebate System program.

For example, the 1991 Dodge Grand Caravan is listed below as ineligible because the 1991 Dodge Grand Caravan with a 4 cylinder engine has an EPA combined mileage of 19 and is not eligible; however, the V6 3.3L and 3.8L engines in these vehicles have EPA combined mileage of 18 and thus are eligible. The changes made some of the following cars with certain engine configurations ineligible:

Ineligible Cars
1987 Alfa Romeo GTV	1987 Alfa Romeo Milano	1987 BMW 5 Series BMW 5 Series The BMW 5 Series is a mid-size / executive car manufactured by BMW since 1972. The car, now in its sixth generation, is sold in sedan and touring body styles....	1987 Chevrolet S10 Blazer 2WD
1987 Dodge Caravan Dodge Caravan The Dodge Caravan is a family minivan manufactured by Chrysler Group LLC and sold under its Dodge brand. Along with its nameplate variant, the Plymouth Voyager, the Caravan was introduced for the 1984 model year. In 1987, the Dodge Grand Caravan long-wheelbase model was introduced and sold... /Grand Caravan/Ram Dodge Ram The Dodge Ram is a full-size pickup truck manufactured by the Chrysler Group LLC. As of late 2010, it has been sold under the Ram Trucks brand. Previously, Ram was part of the Dodge lineup of light trucks... Van 2WD	1987 Dodge Shadow Dodge Shadow For 1987, Chrysler Corporation introduced two new compact cars, the Dodge Shadow and the Plymouth Sundance , intended to replace the Dodge Charger - Dodge Omni and Plymouth Turismo - Plymouth Horizon, respectively...	1987 Ford Aerostar Ford Aerostar The Ford Aerostar is a minivan produced by Ford Motor Company for the North American market; the first such design by Ford, it was sold from the 1986 to the 1997 model years. It was sold in both passenger van and cargo van configurations in two body lengths with both rear wheel drive and all wheel... Van	1987 Ford LTD Crown Victoria Ford LTD Crown Victoria The Ford LTD Crown Victoria is a full-size rear-wheel drive sedan that was produced by the Ford Motor Company from 1983 to 1991. As part of a redesign for the 1992 model year, it was renamed the Ford Crown Victoria...
1987 Ford LTD Crown Victoria Wagon	1987 GMC S15 Jimmy Chevrolet Blazer Chevrolet Blazer can refer to one of several SUV models from General Motors:* The full-size Chevrolet K5 Blazer, based on the C/K pickup chassis and built from 1969 to 1994.... 2WD	1987 Lincoln Continental Lincoln Continental The Lincoln Continental is an automobile which was produced by the Lincoln division of Ford Motor Company from 1939 to 1948 and again from 1956 to 2002...	1987 Lincoln Mark VII
1987 Lincoln Town Car Lincoln Town Car The Lincoln Town Car is a full-size luxury sedan that was sold by the upscale Lincoln division of Ford Motor Company; it was produced from 1981 to the 2011 model years...	1987 Mercury Grand Marquis Mercury Grand Marquis The Mercury Grand Marquis was a full-size rear-wheel drive sedan sold by the Lincoln-Mercury division of the Ford Motor Company; the Grand Marquis was the flagship of the Mercury lineup. The nameplate itself had been in use since 1975 as the premium trim level of the Mercury Marquis; the Grand...	1987 Mercury Grand Marquis Wagon	1987 Plymouth Sundance Plymouth Sundance The Plymouth Sundance is a compact car model that was produced for model years 1987 to 1994. It was designed to compete with upmarket compacts such as the Geo Prizm, Ford Escort and the Honda Civic after the production of the Horizon was to be extended...
1987 Plymouth Voyager Plymouth Voyager In 1984, the Voyager name was applied to Plymouth's variant of Chrysler's all new minivan. This Voyager used the Chrysler S platform, which was derived from the K-platform . In addition to using a derived platform, the Voyager shared many components with the K-cars, most notably the interior... /Grand Voyager 2WD	1987 Plymouth Voyager/Grand Voyager 2WD	1987 Porsche 944 Porsche 944 The Porsche 944 is a sports car built by Porsche from 1982 to 1991. It was built on the same platform as the 924, although 924 production continued through 1988. The 944 was intended to last into the 1990s, but major revisions planned for a 944 S3 model were eventually rolled into the 968 instead,...	1987 Toyota Truck 4WD
1988 Mazda 929 Mazda 929 The Mazda 929 was originally a mid-size car from 1973–1987 and as a full-size car thereafter. Marketed over three decades, the 929 was originally the export name for the Mazda Luce. When equipped with a rotary engine, it was called the Mazda RX-4 in export markets...	1988 Peugeot 505 Peugeot 505 The Peugeot 505 is a large family car produced by the French manufacturer Peugeot from 1979 to 1992 in Sochaux, France. The 505 was Peugeot's last rear-wheel drive car... Sedan	1988 Peugeot 505 Sedan	1988 Toyota 4Runner Toyota 4Runner The Toyota 4Runner is a mid-size SUV manufactured by Toyota and sold throughout the world from 1984 to the present. In Japan it was known as the Toyota Hilux Surf... 4WD
1989 Mazda 929	1989 Peugeot 505 Sedan	1989 Porsche 911 Porsche 911 The Porsche 911 is a luxury 2-door sports coupe made by Porsche AG of Stuttgart, Germany. It has a distinctive design, rear-engined and with independent rear suspension, an evolution of the swing axle on the Porsche 356. The engine was also air-cooled until the introduction of the Type 996 in 1998... Carrera	1990 Audi 80 Quattro
1990 Dodge Caravan/Grand Caravan/Ram Van 2WD	1990 Plymouth Voyager/Grand Voyager 2WD	1990 Saab 9000 Saab 9000 The Saab 9000 is an automobile that was produced by the Swedish company Saab from 1984 to 1997. The 9000 was replaced by the 9-5 in the late 1997....	1990 Toyota 1-Ton Truck 2WD
1990 Toyota Truck 2WD	1991 Audi 80 Quattro	1991 Dodge Caravan/Grand Caravan 2WD	1991 Dodge Ram Dodge Ram The Dodge Ram is a full-size pickup truck manufactured by the Chrysler Group LLC. As of late 2010, it has been sold under the Ram Trucks brand. Previously, Ram was part of the Dodge lineup of light trucks... 50 Pickup 2WD
1991 Lexus ES Lexus ES The Lexus ES series is a family of mid-size luxury sedans sold by Lexus since 1989. Now in its fifth generation, the series has been consistently built on the Toyota Camry platform with a V6 engine, automatic transmission, and front-wheel drive... 250	1991 Mitsubishi Truck 2WD	1991 Plymouth Voyager/Grand Voyager 2WD	1991 Toyota Camry Toyota Camry The Toyota Camry is a series of mid-size automobiles manufactured by Toyota since 1982, and sold in the majority of automotive markets throughout the world...
1991 Toyota Camry Wagon	1992 Acura NSX	1992 Dodge Caravan/Grand Caravan 2WD	1992 Dodge Ram 50 Pickup 2WD
1992 Jeep Cherokee Jeep Cherokee (XJ) The Jeep Cherokee is a unibody compact SUV. It shared the name of the original full-size SJ model, but without a body-on-frame chassis, it set the stage for the modern SUV. Its innovative appearance and sales popularity spawned important imitators as other automakers began to notice that this... 4WD	1992 Jeep Comanche Jeep Comanche The Jeep Comanche is a pickup truck version of the Cherokee compact SUV that was produced from 1985 to 1992. Rear wheel and four-wheel drive models were available, as well as two cargo box lengths of six-feet or seven-feet .-Introduction:During the mid-1980s, according to AMC Chairman W... Pickup 4WD	1992 Mitsubishi Truck 2WD	1992 Plymouth Voyager/Grand Voyager 2WD
1992 Saab 900 Saab 900 The Saab 900 was a car produced by Saab Automobile from 1978 until 1998 in two generations. The first generation from 1978 to 1993 is known as the "classic"; the generation from 1994 to 1998 is known as the "new generation" ....	1992 Saab 900	1993 Dodge Ram 50 Pickup 2WD	1993 Dodge Stealth
1993 Jeep Comanche Pickup 2WD	1993 Mitsubishi 3000 GT	1993 Mitsubishi Truck 2WD	1993 Toyota Camry
1993 Toyota Camry Wagon	1994 Mazda B2300/B3000/B4000 Pickup 2WD	1994 Mazda MPV Mazda MPV The Mazda MPV is a minivan manufactured by Mazda. Introduced in 1989 as a rear-wheel drive model with optional selectable four-wheel drive, it was replaced in 2000 with a front-wheel drive-only version...	1994 Mitsubishi Diamante Mitsubishi Diamante The Mitsubishi Diamante is a car manufactured by Mitsubishi Motors between 1990 and 2005. It was first introduced to the public at the Tokyo Motor Show in 1989, and went on sale in Japan in May 1990. The name was derived from the Spanish, Portuguese, and Italian words for diamond. It became the... Wagon
1994 Volkswagen Corrado Volkswagen Corrado The Volkswagen Corrado is a hatchback coupé developed by German automaker Volkswagen and built by Karmann in Osnabrück, Germany, between 1 September 1988 and 31 July 1995.... SLC	1995 Kia Sportage Kia Sportage The Kia Sportage is a compact crossover SUV built by the Korean automaker Kia Motors since July 1993.- First generation :... 2WD	1995 Mazda MPV	1995 Toyota Tacoma Toyota Tacoma The Toyota Tacoma is a pickup truck produced and manufactured by the Toyota Motor Corporation since 1995. The Tacoma was a compact pickup until a model redesign in 2005 when it was reclassified to a mid-size... 2WD
1996 Jeep Cherokee 2WD	1996 Nissan Truck 2WD	1996 Toyota Supra Toyota Supra The Toyota Supra is a sports car/grand tourer that was produced by Toyota Motor Company from 1979 to 2002. The styling of the Toyota Supra was derived from the Toyota Celica, but it was both longer and wider. Starting in mid-1986, the Supra became its own model and was no longer based on the Celica...	1996 Volkswagen Jetta Volkswagen Jetta Although the Golf had reached considerable success, in the North American markets, Volkswagen observed that the hatchback body style lacked some of the appeal to those who preferred the traditional three-box configuration... GLX
1997 Chrysler Concorde Chrysler Concorde The Chrysler Concorde was a large four-door, full-size, front wheel drive sedan produced by Chrysler from 1993 to 2004. It replaced the Chrysler Fifth Avenue on the lineup. One of Chrysler's 3 original Chrysler LH platform models derived from the American Motors/Renault-designed Eagle Premier, it...	1997 Chrysler New Yorker Chrysler New Yorker The Chrysler New Yorker was a premium automobile built by the Chrysler Corporation from 1939–1996, serving for several years as the brand's flagship model. A model named the "New York Special" first appeared in the 1930s... /LHS	1997 Dodge Intrepid Dodge Intrepid The Dodge Intrepid is a large four-door, full-size, front-wheel drive sedan car model that was produced for model years 1993 to 2004. It was mechanically related to the Chrysler Concorde, Chrysler LHS, Chrysler New Yorker, Eagle Vision, and also the 300M sedans...	1997 Eagle Vision Eagle Vision The Eagle Vision was a full-size, front-wheel drive sedan, marketed as a sports version of the Chrysler LH platform, produced from 1993-1997. It was sold by the Eagle division of the Chrysler Corporation, replacing the AMC/Renault-designed Eagle Premier...
1997 Kia Sportage 4WD	1997 Mercedes-Benz C3 AMG	1997 Nissan Truck 2WD	1997 Toyota Supra
1997 Toyota T100 Toyota T100 The Toyota T100 was a full-sized pickup truck introduced by Toyota in late 1992 as a 1993 calendar year vehicle.... 2WD	1997 Volkswagen Jetta GLX

Karen E. Aldana with the National Highway Traffic Safety Administration

National Highway Traffic Safety Administration

The National Highway Traffic Safety Administration is an agency of the Executive Branch of the U.S. government, part of the Department of Transportation...

said the agency initially wasn't aware of what happened. "On the final rule we said we'd use their fueleconomy.gov ratings, so the fact that they're changing it all of a sudden, if that's happening — this is the first I've heard of this". NHTSA spokesperson Rae Tyson later said that anyone that had made a deal before July 24th had done so at their own risk.

Hyundai Motor America had been helping its dealers close Cash for Clunkers deals early by providing them with cash advances equal to the expected CARS rebate, a Hyundai spokesman said. About 14% of Hyundai sales were Cash for Clunker deals, according to the automaker. Last month, Hyundai sold about 38,000 cars. It was unclear if any of Hyundai's deals so far were made ineligible by the changes, said Hyundai spokesman Phil Leinert, or how the automaker might deal with situations in which a car's eligibility changed.

The EPA "gave no reason its ratings were inaccurate or why some went up", according to USA Today. Karl Brauer, editor in chief of Edmunds.com, said, "It's unfortunate that consumers who had been researching and planning to trade in their vehicle ... are now left in the dust". "Consumers acting in good faith should not be penalized for undisclosed and last-minute changes made by the
government", Kevin Smith, Edmunds.com editorial director, said in a statement.

The U.S. Department of Transportation has ruled that deals involving cash for clunkers trade-ins based on old EPA mileage numbers and consummated before July 24 will be honored, but that deals consummated after July 24 on vehicles that became ineligible as clunkers due to mileage ratings changes will not be honored.

Credit

Depending on the type of car purchased and "the difference in fuel economy between the purchased vehicle and the trade-in vehicle", the amount of the credit given in the form of vouchers to eligible customers is either $3,500 or $4,500. New car dealers will be able to reduce the purchase price by the amount of the voucher for which that the customer is eligible.

Engine disablement and scrappage criteria

To ensure that vehicles traded-in under "Cash For Clunkers" will not be resold by dealers, the program outlines a procedure for destructively disabling the engine (and thus also precluding the possibility that any mechanical engine components might be salvaged to be used in the repair of any other vehicles): The motor oil

Motor oil

Motor oil or engine oil is an oil used for lubrication of various internal combustion engines. The main function is to lubricate moving parts; it also cleans, inhibits corrosion, improves sealing, and cools the engine by carrying heat away from moving parts.Motor oils are derived from...

is drained and replaced with a sodium silicate

Sodium silicate

Sodium silicate is the common name for a compound sodium metasilicate, Na2SiO3, also known as water glass or liquid glass. It is available in aqueous solution and in solid form and is used in cements, passive fire protection, refractories, textile and lumber processing, and automobiles...

solution, then the engine is started and run until the solution, becoming glass-like when heated, causes engine internals to abrade and ultimately seize. In addition, the salvage or scrap facility which acquires the vehicle cannot sell any powertrain components from the scrap vehicle. This includes the disabled engine (most specifically the long block components), the
transmission/transaxle, and in some cases the axle assemblies. The salvage or scrap facility can sell any other component from the scrap vehicle until they are ready to crush and/or shred the vehicle. The salvage or scrap facility has 180 days to ultimately crush and/or shred the vehicle.

The outlined procedure says that running the engine at 2,000 RPM "should disable the engine within a few minutes"; if not, then allow the engine to cool off before repeating the procedure. Hazards associated with the intentional overheating and destruction of the engine include rupturing radiator and hot water/steam, motor oil ejection, toxic fumes, and fire.

By completely disabling the engine, the CARS program avoids recycling schemes such as the one discovered in Germany, where authorities found that an estimated 50,000 scrapped vehicles have been exported to Africa and Eastern Europe, where newer, safer cars of the type being destroyed in the West are prohibitively expensive, In contrast with the U.S. program, the German program only requires dealers to drop off the scrapped vehicles at junkyards, thus allowing the illegal exports.

Auto recyclers and dismantlers

Wrecking yard

A scrapyard or junkyard is the location of a dismantling business where wrecked or decommissioned vehicles are brought, their usable parts are sold for use in operating vehicles, while the unusable metal parts, known as scrap metal parts, are sold to metal-recycling companies...

have criticized the program due to requirements that the engine is to be disabled to prevent re-use of the car. To auto recyclers, a car's engine is considered to be the most valuable part of a junked car. Some recyclers have refused to participate in the program as well due to the limited profit potential of junking a car brought in under CARS.

National Motor Vehicle Title Information System

After Hurricane Katrina

Hurricane Katrina

Hurricane Katrina of the 2005 Atlantic hurricane season was a powerful Atlantic hurricane. It is the costliest natural disaster, as well as one of the five deadliest hurricanes, in the history of the United States. Among recorded Atlantic hurricanes, it was the sixth strongest overall...

, vehicles that were declared as total losses in one state were transferred to other states and resold to unsuspecting consumers with clean titles. In order to avoid clunkers declared under the CARS program and that could also find their way back onto the used-car market through similar surreptitious means, the federal government set up the National Motor Vehicle Title Information System (NMVTIS) to track totaled vehicles and prevent their resale. By October 2009, 28 state motor-vehicle agencies participated or contributed to NMVTIS, and 11 others were working toward participation. All states were required to be fully participating by Jan. 1, 2010.
The CARS program required that recyclers report the Vehicle Identification Numbers (VINs) and the status of clunker to the National Motor Vehicle Title Information System (NMVTIS) within seven days of acquiring the vehicle.

Used car shoppers, by paying a fee, can have access to vehicle-history reports via electronic database at www.vehiclehistory.gov. The database contains information on vehicles from insurance companies, junkyards and salvage yards. The NMVTIS is the sole repository for clunker data.

Program results

Auto Observer said there was one major technological glitch in the program. "Government officials said the public site for customers and the site for dealer sign-ups were on the same server, which became overloaded. The site was taken down [the night of July 24, 2009] while the two functions supposedly were separated and put on two different servers", Auto Observer reported. Dealers also had difficulty getting paperwork processed. Given the uncertainty of being paid, dealers decided to wait on destroying the old cars.

By July 29, $150 million of the $1 billion had already gone to new purchases. Dealers have had a higher volume of potential customers, partly because of other incentives offered by the manufacturers and the sellers. Some dealers believed the increase was only temporary. However, many people who visited car dealers found out their cars were not eligible, but they bought cars anyway. A lot of people who were able to participate were buying anyway, but their trade-in value jumped significantly. According to House Speaker Nancy Pelosi

Nancy Pelosi

Nancy Patricia D'Alesandro Pelosi is the Minority Leader of the United States House of Representatives and served as the 60th Speaker of the United States House of Representatives from 2007 to 2011...

, the cars purchased had higher gas mileage than what the bill required.

The National Highway Traffic Safety Administration

National Highway Traffic Safety Administration

The National Highway Traffic Safety Administration is an agency of the Executive Branch of the U.S. government, part of the Department of Transportation...

reported 23,000 participating dealers. Stabenow said 40,000 cars had been sold and another 200,000 sales had yet to be completed. Sutton chief of staff Nichole Francis Reynolds said, "The program has spent $150 million and has another $800 million to $850 million in (pending) obligations. ... This is one of those programs you can really see working". Rep. Candice Miller

Candice Miller

Candice S. Miller is the U.S. Representative for , serving since 2003. She is a member of the Republican Party.The district includes Michigan's Huron, Macomb, and Sanilac counties, plus portions of Lapeer and Oakland counties....

(R-Mich.) said, "It has exceeded everyone's expectations". Miller and Sutton wanted to spend a total of $4 billion on the program. Bailey Wood, legislative director of the National Auto Dealers Association, said, "Obviously the program has been an immense success in stimulating automotive sales".

On July 30, Wood announced the suspension of the program. White House

Executive Office of the President of the United States

The Executive Office of the President consists of the immediate staff of the President of the United States, as well as multiple levels of support staff reporting to the President. The EOP is headed by the White House Chief of Staff, currently William M. Daley...

Press Secretary Robert Gibbs denied this was happening, saying the administration is "evaluating all options". Dealers that have been aggressively advertising the program cannot simply stop the ads, so there were concerns about whether the program would continue. According to estimates of the Department of Transportation, the $1 billion appropriated for the system was exhausted by July 30, 2009, well before the anticipated end date of November 1, 2009, due to very high demand. The House of Representatives appropriated another $2 billion to the program on July 31, with the Senate adding its approval a week later. President Barack Obama

Barack Obama

signed the bill into law on August 7, and government officials expect that the additional funds will be exhausted by Labor Day

Labor Day

Labor Day is a United States federal holiday observed on the first Monday in September that celebrates the economic and social contributions of workers.-History:...

.

Former Federal Reserve

Federal Reserve System

The Federal Reserve System is the central banking system of the United States. It was created on December 23, 1913 with the enactment of the Federal Reserve Act, largely in response to a series of financial panics, particularly a severe panic in 1907...

chairman Alan Greenspan

Alan Greenspan

Alan Greenspan is an American economist who served as Chairman of the Federal Reserve of the United States from 1987 to 2006. He currently works as a private advisor and provides consulting for firms through his company, Greenspan Associates LLC...

said on ABC's

ABC News

ABC News is the news gathering and broadcasting division of American broadcast television network ABC, a subsidiary of The Walt Disney Company...

This Week
This Week (ABC TV series)
This Week is ABC's Sunday morning political affairs program.The Sunday morning talk show has aired on Sunday mornings on ABC since 1981; the program is initially aired at 9:00 AM ET, although many stations air the program later, especially those in other time zones...

that the success of the program resulted from waiting for the economy to improve. He said, "If ... the clunker program had been put in place six months ago, it would have probably been a dud". Greenspan did not believe the program had stimulated the economy.

On August 3, the DoT reported from a -sample of 120,000 rebate applications already processed, that "the average gas mileage of cars being bought was 28.3 miles per gallon, for SUVs 21.9 miles per gallon, and for trucks, 16.3 miles per gallon, all significantly higher than required to get a rebate". Senator Susan M. Collins said that "vehicles being purchased under the program would go an average of 9.6 more miles per gallon than those being turned in, which she said was a 61 percent improvement". The DoT also commented that the program participants were downsizing, rather than making one-for-one replacements, and turning in their old trucks and SUV’s for new small
sedans, as 83% of the trade-ins were trucks, and 60% of new purchases were cars.

The DoT also reported that "Ford, G.M. and Chrysler supplied 47 percent of the new vehicles, slightly more than their overall share of the market, which is 45 percent". Detroit's Big Three automakers said the demand peak that occurred in the final week of July left their inventories of unsold vehicles at the lowest levels in many years, but such windfall could hurt sales of some popular models in August. Ford sales went up in the United States for the first time since 2007, while GM and Chrysler at least improved by slowing their decline.

After the first week of the program, the Department of Transportation reported that the average fuel efficiency

Fuel economy in automobiles

Fuel usage in automobiles refers to the fuel efficiency relationship between distance traveled by an automobile and the amount of fuel consumed....

of trade-ins was 15.8 mpg, compared to 25.4 mpg for the new cars purchased to replace them, translating to a 61% fuel efficiency improvement. The DoT also commented that the program participants were downsizing, rather than making one-for-one replacements, and turning in their old trucks and SUVs for new small sedans, as 83% of the trade-ins were trucks, and 60% of new purchases were cars. , the top trade-in was the Ford Explorer

Ford Explorer

The Ford Explorer is a sport-utility vehicle sold in North America and built by the Ford Motor Company since 1990, as a replacement for the smaller but related Ford Bronco II. It is manufactured in Chicago, Illinois...

4WD

Four-wheel drive

Four-wheel drive, 4WD, or 4×4 is a four-wheeled vehicle with a drivetrain that allows all four wheels to receive torque from the engine simultaneously...

and the top selling car was the Ford Focus. However, according to an analysis carried out by Edmunds

Edmunds.com

Edmunds.com is a provider of automotive information via Web sites, books, and other media. The company is headquartered in Santa Monica, California and maintains an office outside of Detroit, Michigan...

based on a sample of transactions between July 24 to July 31 (the first week of the program), the Ford Escape

Ford Escape

The Ford Escape is a compact SUV sold by the automaker Ford Motor Company introduced in 2000 as a 2001 model year and priced below the Ford Explorer. Although technically it's a crossover vehicle, it is marketed by Ford as part of its traditional SUV lineup rather than its separate crossover lineup...

crossover SUV was the actual best seller while the Ford Focus ranked in second place, when the tallying is done grouping different versions of the same vehicle together.
As of August 21, the Department of Transportation reported that the downsizing trend continued, with the Toyota Corolla

Toyota Corolla

The Toyota Corolla is a line of subcompact and compact cars manufactured by the Japanese automaker Toyota, which has become very popular throughout the world since the nameplate was first introduced in 1966. In 1997, the Corolla became the best selling nameplate in the world, with over 35 million...

ranking as the top seller after four weeks of the program, followed by the Honda Civic

Honda Civic

The Honda Civic is a line of subcompact and subsequently compact cars made and manufactured by Honda. The Civic, along with the Accord and Prelude, comprised Honda's vehicles sold in North America until the 1990s, when the model lineup was expanded...

, and the Ford Focus, and the Ford Explorer

Ford Explorer

4WD

Four-wheel drive

Four-wheel drive, 4WD, or 4×4 is a four-wheeled vehicle with a drivetrain that allows all four wheels to receive torque from the engine simultaneously...

continued as the top trade-in.

According to USDoT, at the end of the program Toyota accounted for 19.4 % of sales, followed by General Motors

General Motors

with 17.6 %, Ford

Ford Motor Company

with 14.4 %, Honda

Honda

with 13.0 %, and Nissan with 8.7%.

Top 10 trade-ins and replacements - Official U.S. DoT ranking at the end of the program
Top trade-ins				Top sellers
Ranking	Vehicle	Ranking	Vehicle	Ranking	Vehicle	Combined City/Hwy mileage Fuel economy in automobiles Fuel usage in automobiles refers to the fuel efficiency relationship between distance traveled by an automobile and the amount of fuel consumed.... (mpg MPG MPG or mpg may refer to:.mpg, one of a number of file extensions for MPEG-1 or MPEG-2 audio and video compressionGeneral Motors Milford Proving Ground*Havas Media, formerly known as Media Planning Group, a media division of Havas... )	Ranking	Vehicle	Combined City/Hwy mileage Fuel economy in automobiles Fuel usage in automobiles refers to the fuel efficiency relationship between distance traveled by an automobile and the amount of fuel consumed.... (mpg MPG MPG or mpg may refer to:.mpg, one of a number of file extensions for MPEG-1 or MPEG-2 audio and video compressionGeneral Motors Milford Proving Ground*Havas Media, formerly known as Media Planning Group, a media division of Havas... )
1	Ford Explorer Ford Explorer The Ford Explorer is a sport-utility vehicle sold in North America and built by the Ford Motor Company since 1990, as a replacement for the smaller but related Ford Bronco II. It is manufactured in Chicago, Illinois... 4WD Four-wheel drive Four-wheel drive, 4WD, or 4×4 is a four-wheeled vehicle with a drivetrain that allows all four wheels to receive torque from the engine simultaneously...	6	Jeep Cherokee Jeep Cherokee (XJ) The Jeep Cherokee is a unibody compact SUV. It shared the name of the original full-size SJ model, but without a body-on-frame chassis, it set the stage for the modern SUV. Its innovative appearance and sales popularity spawned important imitators as other automakers began to notice that this... 4WD	1	Toyota Corolla Toyota Corolla The Toyota Corolla is a line of subcompact and compact cars manufactured by the Japanese automaker Toyota, which has become very popular throughout the world since the nameplate was first introduced in 1966. In 1997, the Corolla became the best selling nameplate in the world, with over 35 million...	25-30	6	Nissan Versa	N/A
2	Ford F-150 pickup Pickup truck A pickup truck is a light motor vehicle with an open-top rear cargo area .-Definition:... 2WD Two-wheel drive Two wheel drive or 2WD describes vehicles with a drivetrain that allows two wheels to receive power from the engine simultaneously.-Four wheeled vehicles:...	7	Chevrolet Blazer Chevrolet Blazer Chevrolet Blazer can refer to one of several SUV models from General Motors:* The full-size Chevrolet K5 Blazer, based on the C/K pickup chassis and built from 1969 to 1994.... 4WD	2	Honda Civic Honda Civic The Honda Civic is a line of subcompact and subsequently compact cars made and manufactured by Honda. The Civic, along with the Accord and Prelude, comprised Honda's vehicles sold in North America until the 1990s, when the model lineup was expanded...	24-42	7	Toyota Prius Toyota Prius The Toyota Prius is a full hybrid electric mid-size hatchback, formerly a compact sedan developed and manufactured by the Toyota Motor Corporation...	46
3	Jeep Grand Cherokee Jeep Grand Cherokee The Jeep Grand Cherokee is a Mid-size SUV produced by the Jeep division of Chrysler. While some other SUVs were manufactured with body on frame construction, the Jeep Grand Cherokee has always used a unibody chassis.- Development :... 4WD	8	Chevrolet C 1500 Chevrolet C/K The C/K is the name for Chevrolet and GMC's full-size pickup truck line from 1960 until 1999 in the United States, from 1965 to 1999 Canada, from 1964 through 2001 in Brazil, and from 1975 to 1982 in Chile. The first Chevrolet pickup truck appeared in 1924, though in-house designs did not appear... pickup 2WD	3	Toyota Camry Toyota Camry The Toyota Camry is a series of mid-size automobiles manufactured by Toyota since 1982, and sold in the majority of automotive markets throughout the world...	23-34	8	Honda Accord Honda Accord The Honda Accord is a series of compact, mid-size and full-size automobiles manufactured by Honda since 1976, and sold in a majority of automotive markets throughout the world....	N/A
4	Ford Explorer Ford Explorer The Ford Explorer is a sport-utility vehicle sold in North America and built by the Ford Motor Company since 1990, as a replacement for the smaller but related Ford Bronco II. It is manufactured in Chicago, Illinois... 2WD	9	Ford F-150 pickup 4WD	4	Ford Focus	27-28	9	Honda Fit Honda Fit The Honda Jazz is a five-door hatchback subcompact manufactured by the Honda Motor Company of Japan, first introduced in June 2001 and is now in its second generation. The Jazz shares Honda's Global Small Car Platform with the City/Fit Aria, Airwave/Partner, Mobilio, Mobilio Spike, Freed and Freed...	29-31
5	Dodge Caravan Dodge Caravan The Dodge Caravan is a family minivan manufactured by Chrysler Group LLC and sold under its Dodge brand. Along with its nameplate variant, the Plymouth Voyager, the Caravan was introduced for the 1984 model year. In 1987, the Dodge Grand Caravan long-wheelbase model was introduced and sold... /Grand Caravan	10	Ford Windstar Ford Windstar The Ford Windstar is a minivan that was produced and sold by the Ford Motor Company from the 1995 to 2003 model years. This front-wheel drive minivan was the second minivan designed by the company, serving as a replacement for the rear-wheel drive Aerostar minivan. The two were sold concurrently... minivan Minivan Minivan is a type of van designed for personal use. Minivans are typically either two-box or one box designs for maximum interior volume – and are taller than a sedan, hatchback, or a station wagon....	5	Hyundai Elantra Hyundai Elantra Launched in 1990 , the Elantra received a mid-term facelift in 1993.The Elantra was powered by a Mitsubishi-designed 1.6 L straight-4 This DOHC 16-valve 1.6 L unit produced 113 hp at 6000 rpm and could push the Elantra to 60 mph in 9.5 seconds...	26-28	10	Ford Escape Ford Escape The Ford Escape is a compact SUV sold by the automaker Ford Motor Company introduced in 2000 as a 2001 model year and priced below the Ford Explorer. Although technically it's a crossover vehicle, it is marketed by Ford as part of its traditional SUV lineup rather than its separate crossover lineup... FWD	20-32
Sources: Final ranking by the U.S. Department of Transportation reported on August 26, 2009. Fuel economy Fuel economy in automobiles Fuel usage in automobiles refers to the fuel efficiency relationship between distance traveled by an automobile and the amount of fuel consumed.... by the National Highway Traffic Safety Administration National Highway Traffic Safety Administration The National Highway Traffic Safety Administration is an agency of the Executive Branch of the U.S. government, part of the Department of Transportation... .

The following table tabulates top replacements under the CARS program based on information submitted for rebates. Each vehicle model combines all drivetrains, hybrids and year models, which was tabulated separately in the U.S. Department of Transportation ranking.

Top 10 Replacements ranking According to data submitted to CARS, as of Sept. 9, 2009 (aggregating different versions and year models of the same vehicle together)
Ranking	Vehicle	Ranking	Vehicle
1	Toyota Corolla Toyota Corolla The Toyota Corolla is a line of subcompact and compact cars manufactured by the Japanese automaker Toyota, which has become very popular throughout the world since the nameplate was first introduced in 1966. In 1997, the Corolla became the best selling nameplate in the world, with over 35 million...	6	Chevrolet Silverado Chevrolet Silverado The Chevrolet Silverado , is the latest line of full-size pickup trucks from General Motors.-History:... pickup Pickup truck A pickup truck is a light motor vehicle with an open-top rear cargo area .-Definition:...
2	Honda Civic Honda Civic The Honda Civic is a line of subcompact and subsequently compact cars made and manufactured by Honda. The Civic, along with the Accord and Prelude, comprised Honda's vehicles sold in North America until the 1990s, when the model lineup was expanded...	7	Nissan Versa
3	Toyota Camry Toyota Camry The Toyota Camry is a series of mid-size automobiles manufactured by Toyota since 1982, and sold in the majority of automotive markets throughout the world...	8	Ford F-150 pickup
4	Ford Focus	9	Honda Accord Honda Accord The Honda Accord is a series of compact, mid-size and full-size automobiles manufactured by Honda since 1976, and sold in a majority of automotive markets throughout the world....
5	Hyundai Elantra Hyundai Elantra Launched in 1990 , the Elantra received a mid-term facelift in 1993.The Elantra was powered by a Mitsubishi-designed 1.6 L straight-4 This DOHC 16-valve 1.6 L unit produced 113 hp at 6000 rpm and could push the Elantra to 60 mph in 9.5 seconds...	10	Nissan Altima Nissan Altima The Nissan Altima is a mid-size automobile manufactured by Nissan, and is arguably a continuation of the Nissan Bluebird line, which began in 1957. It has historically been larger, more powerful, and more luxurious than the Nissan Sentra but less so than the Nissan Maxima. The Altima is available...
Sources: CARS: list of new vehicles involved in CARS transactions, info submitted, current as of Sept. 9, 2009

Economic effects

In a study published after the program ended, Burton A. Abrams and George R. Parsons, professors at the University of Delaware
University of Delaware
The university is organized into seven colleges:* College of Agriculture and Natural Resources* College of Arts and Sciences* Alfred Lerner College of Business and Economics* College of Earth, Ocean and Environment* College of Education and Human Development...

, concluded that for each vehicle trade, the program had a net cost of approximately $2,000.

A September 2010 study by Atif R. Mian and Amir Sufi concluded that the program simply pulled purchases from the future: it produced a short-lived effect (360,000 additional cars sold in 2 months), but that the effect was almost completely reversed in the 7 following months due to fewer cars sold, and found no evidence of effect on employment, house prices, or household default rates in cities with higher exposure.

An article in The Economist
The Economist
The Economist is an English-language weekly news and international affairs publication owned by The Economist Newspaper Ltd. and edited in offices in the City of Westminster, London, England. Continuous publication began under founder James Wilson in September 1843...

argued that the program is the kind of policy required to avoid the liquidity trap
Liquidity trap
A liquidity trap is a situation described in Keynesian economics in which injections of cash into an economy by a central bank fail to lower interest rates and hence to stimulate economic growth. A liquidity trap is caused when people hoard cash because they expect an adverse event such as...

in times of economic depression, as defined by John Maynard Keynes
John Maynard Keynes
John Maynard Keynes, Baron Keynes of Tilton, CB FBA , was a British economist whose ideas have profoundly affected the theory and practice of modern macroeconomics, as well as the economic policies of governments...

. The article states that:
the boost in demand that the rebates have brought about is exactly the sort of stimulus that is urgently needed to escape what John Maynard Keynes called a “liquidity trap”. According to his theory, consumers may become so worried about the economy that they cling to as much liquid wealth as possible, cutting their spending sharply and thereby triggering precisely the slump they feared. Moreover, as stimulus policies go, cash-for-clunkers looks to be unusually effective. Admittedly, that is not an especially demanding measure, given that Keynes favoured, if need be, burying money in bottles for people to dig up and spend. Cash-for-clunkers has many benefits beyond simply getting more money passing through the hands of consumers and into aggregate demand.

Other commentators disagreed, arguing that the program was an example of the parable of the broken window
Parable of the broken window
The parable of the broken window was introduced by Frédéric Bastiat in his 1850 essay to illustrate why destruction, and the money spent to recover from destruction, is actually not a net-benefit to society...

:
This is the lesson of Frederic Bastiat’s essay, “That Which is Seen, and That Which is Unseen.” Bastiat, a 19th century French political economist, tells the story of a shopkeeper who has to hire a glazier to repair a broken window, providing work and income for him in the process. That’s what is seen. What is unseen is what the shopkeeper would have done if he didn’t have to pay the glazier. He might have bought shoes for his children, providing income for the shoemaker, who in turn could buy leather to produce more shoes. The glazier’s gain is the shoemaker’s loss. There is no net gain, no job or income creation, from this transaction.

John Irons, research and policy director for the Economic Policy Institute, said that in improving the economy, "in terms of bang for the buck, this is up there pretty high up there".

Jacksonville State University
Jacksonville State University
Jacksonville State University is a regional public coeducational university located in Jacksonville, Alabama, USA. Founded in 1883, Jacksonville State offers programs of study in four academic units leading to Bachelor's, Master's, and Education Specialist degrees, in addition to continuing and...

economist Christopher Westley said that the program "sticks it" to the poor and lower-middle classes by raising the price of the remaining cars in the secondary market, as well as by raising the general price level resulting from the monetary inflation
Inflation
In economics, inflation is a rise in the general level of prices of goods and services in an economy over a period of time.When the general price level rises, each unit of currency buys fewer goods and services. Consequently, inflation also reflects an erosion in the purchasing power of money – a...

required to finance it. Westley called CARS the "I Hate the Poor Act of 2009".

Despite Transportation Secretary LaHood claims that the program would benefit scrapyards, auto recyclers and scrapyards have lamented the limited profit potential of the program, including the costs of transporting and removal of toxic waste such as motor oil
Motor oil
Motor oil or engine oil is an oil used for lubrication of various internal combustion engines. The main function is to lubricate moving parts; it also cleans, inhibits corrosion, improves sealing, and cools the engine by carrying heat away from moving parts.Motor oils are derived from...

, coolant
Coolant
A coolant is a fluid which flows through a device to prevent its overheating, transferring the heat produced by the device to other devices that use or dissipate it. An ideal coolant has high thermal capacity, low viscosity, is low-cost, non-toxic, and chemically inert, neither causing nor...

, refrigerants, gasoline
Gasoline
Gasoline , or petrol , is a toxic, translucent, petroleum-derived liquid that is primarily used as a fuel in internal combustion engines. It consists mostly of organic compounds obtained by the fractional distillation of petroleum, enhanced with a variety of additives. Some gasolines also contain...

, unrecoverable plastics, and other items) from the car before processing, which can amount to between $700–$1,200 per car. Some recyclers refuse to participate in the program due to this.

name="Scrappers"/>

Early reports showed that the program, though promoted as bolstering Detroit’s embattled carmakers, have actually increased market share for Japanese and Korean automakers. According to data published by the National Highway Traffic Safety Administration, Americans have used the scrappage incentives to buy more vehicles from Toyota than any of the three Detroit carmakers. Only Ford did not drop in market share after the program was introduced.

According to an Edmunds.com
Edmunds.com
Edmunds.com is a provider of automotive information via Web sites, books, and other media. The company is headquartered in Santa Monica, California and maintains an office outside of Detroit, Michigan...

study released October 28, the program actually cost Americans nearly $20,000 more per car than the maximum rebate. Only 125,000 of the 690,000 purchases would not have been made without the incentives, the company said, and with $3 billion spent, that works out to $24,000 per car. However, the White House disputes this claim on the grounds that Edmunds relies on two faulty assumptions: it assumes "that the market for cars that didn’t qualify for Cash for Clunkers was completely unaffected by this program" and ignores the beneficial impact that the program will have on 4th Quarter GDP because automakers have ramped up their production to rebuild their depleted inventories.

A study published by the Center for Business and Economic Research
Center for Business and Economic Research
The Ball State University Center for Business and Economic Research , formerly the Bureau of Business Research, is an economic policy and forecasting research center housed within the Miller College of Business at Ball State University in Muncie, Indiana. CBER research encompasses health care,...

at Ball State University estimated the actual CARS-induced automobile sales increase as roughly 685,000 for July and August 2009. The author used an econometric model of monthly automobile sales, treating the CARS period of July and August in two different ways to account for the inconsistent time periods in each. Noting several concerns with the legislation, this author was not sanguine in its assessment of the program, but did note that: one criticism of the program – that Cash for Clunkers actually led to few additional automobiles sold – does not survive the scrutiny of empirics.

Charities

Charitable organization

A charitable organization is a type of non-profit organization . It differs from other types of NPOs in that it centers on philanthropic goals A charitable organization is a type of non-profit organization (NPO). It differs from other types of NPOs in that it centers on philanthropic goals A...

s have also bemoaned the program, noting the lack of repairable cars for charity purposes, and a source of revenue to fund programs.

Environmental effects

Critics argued that people trading in cars would use such funds to mostly buy trucks, with a minimal benefit on gas mileage. However, the average fuel economy of a clunker was 15.8 mpg, compared to 25.4 mpg for the car that replaced it—a 61% improvement. The DoT has commented that the program participants were downsizing, rather than making one-for-one replacements, and turning in their old trucks and SUV’s for new small sedans, as 83% of the trade-ins were trucks, and 60% of new purchases were cars. New federal data analyzed by The Associated Press finds that the single most common swap, at an occurrence rate of more than 8,200 times, involved Ford F-150 pickup owners. The fuel economy for the new trucks ranges from 15 to 17 miles per gallon, which equates to a mere 1 to 3 mpg improvement over the clunkers.

The Associated Press

Associated Press

The Associated Press is an American news agency. The AP is a cooperative owned by its contributing newspapers, radio and television stations in the United States, which both contribute stories to the AP and use material written by its staff journalists...

, in using Edmunds data, noted that many not-so-green cars have also been bought under CARS, notably SUVs, Truck

Truck

A truck or lorry is a motor vehicle designed to transport cargo. Trucks vary greatly in size, power, and configuration, with the smallest being mechanically similar to an automobile...

s, Luxury, and Crossover vehicles. Some buyers have been noted to have bought the Cadillac SRX

Cadillac SRX

Engine options include the High-Feature V6 and the 4.6 L Northstar V8. It is based on the GM Sigma platform and comes with a five or six-speed automatic transmission; rear-wheel drive and four-wheel drive are available....

, while other vehicles such as the Hummer H3T, Lexus RX 350, Lincoln MKX

Lincoln MKX

The Lincoln MKX is a mid-size luxury crossover from Ford's Lincoln division and a de facto successor to the Lincoln Aviator luxury SUV. It debuted as a 2007 model in December 2006 as a production version of the Lincoln Aviator Concept shown at the 2004 North American International Auto Show...

, and BMW X3

BMW X3

The BMW X3 is a compact crossover SUV marketed by the German automaker BMW, based on the BMW 3-Series automobile platform, and now in its second generation. BMW designed the X3 in conjunction with Magna Steyr of Graz, Austria — who manufactured all X3s under contract to BMW for the first...

are qualified under the program, despite being rated under 20MPG, some considerably less than the average 25.3 mpg for cars purchased under CARS. The models also fall under the $45,000 threshold outlined in CARS.

Declan McCullagh

Declan McCullagh

Declan McCullagh is an American journalist and columnist for CBSNews.com. He specializes in computer security and privacy issues. He is notable, among other things, for his early involvement with the media interpretation of U.S...

, from CBSNews.com

CBS News

CBS News is the news division of American television and radio network CBS. The current chairman is Jeff Fager who is also the executive producer of 60 Minutes, while the current president of CBS News is David Rhodes. CBS News' flagship program is the CBS Evening News, hosted by the network's main...

, argued that "as fuel efficiency has increased since the early 1980s, cars get driven more. Plus, there's the environmental cost of building the new vehicles in the first place". William Chameides, dean of the Nicholas School of the Environment at Duke University

Duke University

Duke University is a private research university located in Durham, North Carolina, United States. Founded by Methodists and Quakers in the present day town of Trinity in 1838, the school moved to Durham in 1892. In 1924, tobacco industrialist James B...

, argued that between 3 to 12 tons of carbon dioxide are emitted for each new car, due to such factors as shipping the car and the electricity consumed in manufacturing it. In addition, in order to offset the carbon footprint of the new car from a clunker (using the ratio of 18 mpg for the "clunker" and the minimum 22 mpg for a qualifying vehicle), the average driver would need to drive the car about five and a half years; with trucks, the figure jumps to eight or
nine years of typical driving.

Harvard economics professor Edward Glaeser

Edward Glaeser

Edward Ludwig "Ed" Glaeser is an economist at Harvard University. He was educated at The Collegiate School in New York City before obtaining his B.A. in economics from Princeton University and his Ph.D. in economics from the University of Chicago...

argues that subsidizing fuel-efficient vehicles encourages more driving, as the marginal cost

Marginal cost

In economics and finance, marginal cost is the change in total cost that arises when the quantity produced changes by one unit. That is, it is the cost of producing one more unit of a good...

per mile driven is less, which causes total fuel consumption to decrease less than expected. He proposes that a more effective policy would be to raise taxes on carbon dioxide emissions. Bruce Belzowski, a scientist at the University of Michigan

University of Michigan

's Transportation Research Institute, notes that the number of vehicles involved in the CARS program (~250 thousand) is a small fraction of the number of vehicles currently on U.S. roads (~260 million) and thus is not expected to have an appreciable effect on pollution savings.

A study by researchers at the University of Michigan

University of Michigan

evaluated the effects of the program on the average fuel economy

Fuel economy in automobiles

Fuel usage in automobiles refers to the fuel efficiency relationship between distance traveled by an automobile and the amount of fuel consumed....

considering a baseline without the existence of the program, since there was already a trend for buying vehicles with higher fuel economy due to the high gasoline prices of 2007 and 2008, and the economic crisis of 2008. The study found that the program improved the average fuel economy of all vehicles purchased by 0.6 mpg in July 2009 and by 0.7 mpg in August 2009, as summarized in the following table:

Predicted fuel economy of all purchased new light-duty vehicles without the program and the actual fuel economy in July and August 2009.
Month	Predicted baseline fuel economy without the program (mpg)	Actual fuel economy with the program (mpg)	Overall improvement in fuel economy due to the program (change in mpg)
July 2009	21.55	22.11	0.6
August 2009	21.67	22.39	0.7

Rationale for removing the most inefficient vehicles

Saving one gallon of gasoline per 100 miles saves 20 pounds of carbon dioxide, which is approximately one ton of carbon dioxide every 10,000 miles of driving. An improvement from 14 MPG to 25 MPG saves 3 gallons of gas per 100 miles, or 3 tons of carbon dioxide in 10,000 miles of driving. The replacement of older vehicles also reduces other non-greenhouse pollutants. "Gas consumption" calculators that translate "miles per gallon" to a measure of "gallons per mile" can help car buyers see the gas savings from their trade ins.

Safety

National Highway Traffic Safety Administration

The National Highway Traffic Safety Administration is an agency of the Executive Branch of the U.S. government, part of the Department of Transportation...

spokesman Eric Bolton pointed out the newer cars purchased under the program are also "considerably safer than the old clunkers they are replacing".

Scrap Value

Part of the Car Allowance Rebate System bill made buyers eligible for the scrap value of the car along with the rebate, with the dealers taking in $50 of the value and to share the rest of the value to the buyer. While some dealers and Car Dealer Associations have argued that buyers were not entitled to the scrap value of the car, Advocacy groups and State Attorney Generals argued that the law made the issue clear that buyers were entitled to the scrap value of the car. Some dealers have claimed that they did pass on the scrap value of the car to buyers.

Exotic Cars crushed under the program

Jalopnik

Jalopnik is a Weblog covering cars, car culture, and the automotive industry. Owned and operated by Gawker Media since 2004, Jalopnik emphasizes irreverent humor....

reviewed the lists published by the NHTSA and found numerous cars crushed under the program that had book values far exceeding the rebates offered by the government. Among some of the cars whose book value was worth more than government rebates included models ranging from the Buick GNX to the Bentley Continental R

Bentley Continental R

The Bentley Continental R is a large, expensive, luxury coupé made by Bentley from 1991 to 2002. It was the first Bentley to feature a body not shared with a Rolls-Royce model since the S3 of 1965, the first to use the GM 4L80-E transmission, and the quickest, most expensive, and most powerful...

. However, a further review noted that some cars that were thought of as being crushed under the program were improperly recorded a/or swapped for other car models or trims. Some exotic/collectible vehicles were scrapped under the program, including a Maserati Biturbo

Maserati Biturbo

The Maserati Biturbo is a sports car introduced by Maserati in 1981. The Biturbo is a two-door, four-seater notchback coupé featuring, as the name implies, a two-litre V6 engine with two turbochargers and a luxurious interior.The car was designed by Pierangelo Andreani, an engineer from the De...

, a GMC Syclone

GMC Syclone

The GMC Syclone is a high-performance version of the GMC Sonoma pickup truck. Produced in 1991, the Syclone spawned the similarly powered 1992-1993 GMC Typhoon SUV. Another vehicle, the GMC Sonoma GT, offered less performance but was seen as a companion model.At the time it was introduced, the...

, a La Forza

La Forza

Laforza was an American automobile manufacturer. The company sold an Italian-built military and police body and chassis designed by Tom Tjaarda, fitted with Italian leather interior and a fuel injected Ford Windsor engine. It was marketed as a "luxury 4x4", competing with the Range Rover...

SUV, a TVR 280i, and Chevrolet Corvette

Chevrolet Corvette

The Chevrolet Corvette is a sports car by the Chevrolet division of General Motors that has been produced in six generations. The first model, a convertible, was designed by Harley Earl and introduced at the GM Motorama in 1953 as a concept show car. Myron Scott is credited for naming the car after...

Ending the program

On August 20, 2009, Transportation

United States Department of Transportation

The United States Department of Transportation is a federal Cabinet department of the United States government concerned with transportation. It was established by an act of Congress on October 15, 1966, and began operation on April 1, 1967...

Secretary

United States Secretary of Transportation

The United States Secretary of Transportation is the head of the United States Department of Transportation, a member of the President's Cabinet, and fourteenth in the Presidential line of succession. The post was created with the formation of the Department of Transportation on October 15, 1966,...

Ray LaHood

Raymond H. "Ray" LaHood is a Republican politician from Illinois who is currently the United States Secretary of Transportation, having served since 2009. Previously, he represented the Illinois's 18th congressional district in the U.S. House of Representatives for seven terms .-Early life and...

announced that the program would end at 8:00 p.m. Eastern Time

Eastern Time Zone

The Eastern Time Zone of the United States and Canada is a time zone that falls mostly along the east coast of North America. Its UTC time offset is −5 hrs during standard time and −4 hrs during daylight saving time...

on Monday, August 24. After the announcement, several dealers decided to stop participating in the program after Saturday, August 22, due to the difficulties in processing their reimbursements through the government web site where the paperwork must be filed.

Secretary Ray LaHood also commented that "it [had] been a thrill to be part of the best economic news story in America", in a news conference regarding the announcement on August 20. As of early August 25, the DoT reported 665,000 dealer transactions corresponding to $2.77 billion in rebates.

In October 2011, former Obama administration economic adviser Austan Goolsbee

Austan Goolsbee

Austan Dean Goolsbee is an American economist, formerly serving as the Chairman of the Council of Economic Advisers and the youngest member of the cabinet of President Barack Obama. Goolsbee is from the University of Chicago where he is the Robert P...

stated that, "the administration misjudged how quickly the country could recover from the economic damage of the 2008 economic collapse" and now knowing that it has "proved a longer, tougher ride than we thought at the time", he would not have created this short-run program to stimulate the economy, but "he supports the overall stimulus program, which he claims warded off a depression."

External links

List of Traded in Vehicles provided on the cars.gov website.

The source of this article is wikipedia, the free encyclopedia. The text of this article is licensed under the GFDL.

Legislative history

Eligibility criteria

Last-minute car ineligibility

Credit

Engine disablement and scrappage criteria

National Motor Vehicle Title Information System

Program results

Economic effects

Charities

Environmental effects

Rationale for removing the most inefficient vehicles

Safety

Scrap Value

Exotic Cars crushed under the program

Ending the program

See also

External links