Will a Cash-for-Clunkers Program Work?

In Germany, it worked like a charm - a program to give consumers cash for their old clunkers took gas guzzling cars off the road, and boosted new car sales in Germany by 40 percent, reports CBS News correspondent Randall Pinkston.

But here in the U.S., a similar cash-for-clunkers program is more complicated. Dealers like Jim Russomano in New Jersey say it may not be as effective as Germany's in driving up sales.

"The restrictions are much more severe than I thought they would be," said Russomano, the owner of Nutley Chevrolet. "I thought it would be a lot easier to take some junkers off the road but it's not going to be as easy as I thought."

Germany spent $5 billion to buy back cars. A clunker was defined as any car more than nine years old. Turn one in for scrap and you'd receive the equivalent of $3,300 dollars towards a new car.

The U.S. allocated $1 billion for its program - Car Allowance Rebate System (CARS). Car buyers who qualify received $3,500 or $4,500 towards a new car.


Click here to find out if your car's gas rating qualifies as a clunker
Click here for general information about the program



But the qualification for "clunker" isn't easy. It's based on an EPA gas mileage rating of 18 miles per gallon or less when the vehicle was new.

So a 1989 Buick Regal, a 20-year-old car, does not qualify as a clunker, beause it was sold with an EPA rating of 21 miles per gallon. But a 2000 Ford Windstar, only nine years old, does qualify because its original gas mileage was only 17 miles per gallon.

"I think that more than 50 percent of the people will not qualify for any of the vouchers because their vehicle that they're looking to get out of exceeds the 18 miles per gallon," Russomano said.

And there are more rules: the vehicle has to be less than 25 years old, in drivable condition, and registered and insured by the same owner for a full year before trade-in.

"We estimate that about 150,000 people will take advantage of this deal," said Rebecca Lindland, the director of the Autos Group at HIS Global Insight in Lexington, Mass. "It seems like a good idea except when you really go and try to qualify for it you don't."

For car owners able to meet the requirements, there's only one more wrinkle: while the program took effect on July 1, the rules won't be in place until July 23. To find out if you're car's gas rating qualifies as a clunker, click here and for general information about the program, click here.
  • Randall Pinkston

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