“Cash for Clunkers” Program Passes U.S. House

June 11, 2009, WASHINGTON, D.C. – The economic downturn has hit the auto industry particularly hard in the U.S. – industry sales have been declining for the past 18 months.  On Tuesday (June 9th), the U.S. House passed legislation to create a “cash for clunkers” program, which is estimated to result in the sale of over a million new fuel-efficient cars and trucks.

“This program will allow consumers to trade in their old, gas-guzzling cars for vouchers worth up to $4,500 that can be used to pay for new, more fuel-efficient vehicles,” explained Congressman Bart Gordon, who strongly supported passage of the bill.  “In some European countries, ‘cash for clunkers’ programs have increased car sales by as much as 20 percent.”

The bill, the Consumer Assistance to Recycle and Save (CARS) Act, would create a new program within the Transportation Department's National Highway Traffic Safety Administration that will give out $3,500 and $4,500 vouchers for the purchase of new, more fuel-efficient cars upon the trade-in of older cars that get 18 miles per gallon (mpg) or less. 

To qualify for a voucher, the new car or truck must get at least 22 mpg.  If the fuel economy of the new car is at least four mpg higher than the old vehicle, the voucher will be worth $3,500.  If the fuel economy of the new car is at least ten mpg higher than the old vehicle, the voucher will be worth $4,500.

“This bill is not only important to our economy, but also our national security,” added Gordon.  “In addition to giving a boost to America’s auto industry, more fuel-efficient cars on the road will reduce our dependence on foreign oil.  The bill is expected to help reduce U.S. oil consumption by more than 250 million gallons of gas.”

The bipartisan legislation is supported by a broad coalition that includes car dealers, the U.S. Chamber of Commerce, the National Association of Manufacturers, and the AFL-CIO and UAW.  The legislation is expected to pass the Senate in the next few weeks, and the Administration has indicated support for the bill.