'Cash For Clunkers' Could Revive Auto Segment

clunker Fleet modernization programs, known colloquially as the "Cash for Clunkers" bill, seem to have worked in Europe and Asia to keep the auto industry there from going to hell in a fast-back. But will they work here? It seems, at long last, that we are going to find out.

Late in the week, the Senate passed its version of the House fleet modernization bill contained in H.R. 2346. The auto stimulus bill -- the first legislation aimed at shocking the automotive market back to life -- essentially pays consumers up to $4,500 for trading in a less-fuel-efficient vehicle for a cleaner, more fuel-sipping car or truck.

Actually, the Senate almost didn't get the bill passed because a critical group of lawmakers did not want the $1 billion program attached to the wartime spending bill. The minimum number of lawmakers rejected an effort to eject the program from war spending, with one senator casting the key vote after President Barack Obama reportedly promised her that he would push for more fuel-efficient vehicles.



A Web site for the program,, explains that, hypothetically, a consumer could take a car worth $500 on trade-in and wind up with $5,000 for trade-in by getting up to $4,500 from the government.

The Web site says it is running a national effort to certify eligible car dealers and equip them with the right communication plan and campaigns to reach and help qualifying consumers in their market. is using celebrities to push the effort. "Dancing With The Stars"' Cristian de la Fuente and "Ugly Betty" star Angelica Vale are both involved, focusing on the Hispanic American community.

The bill -- officially "Consumer Assistance or Recycle and Save Program" -- is intended to do three things at once: boost the market, save consumers money and help the environment.

Car shoppers will get a $4,500 voucher if the car they are trading in gets 18 miles per gallon in fuel efficiency or worse. Drivers who buy a car with a 10-mpg improvement over their previous car qualify for the $4,500 voucher; those who choose a car with a 4-mpg improvement qualify for $3,500. SUV and truck owners also qualify for the program but fall under slightly different qualifications.

Automakers and dealer groups are supporting the measure. The National Automotive Dealers Association (NADA) says it has been working with the National Highway Transportation and Safety Association to make this bill happen.

Said John McEleney, chairman of NADA: "With families struggling in this economy, giving them an additional $3,500 to $4,500 to apply toward their down payment will put a new vehicle purchase in reach for many. With more fuel-efficient vehicles on the road, it will also help reduce the nation's dependence on foreign oil. A spike in new car and truck sales will also help communities that rely on the revenue from vehicle sales taxes and other fees to fill their budget shortfalls."

The Association of International Automobile Manufacturers, representing Japanese, European, and Korean automakers' U.S. operations, offered support. The group's president and CEO, Michael J. Stanton, said that by stimulating the economy, the program will "radiate economic benefits out to suppliers, dealers and small businesses all around the country."

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