The Cash For Clunkers Program
The CARS Act or Car Allowance Rebate System Act is colloquially known the 'Cash for Clunkers' program in US
. The programme officially commenced on July1, 2009 and ended on August 24, 2009. It had been introduced as a $3 billion US federal scrappage program intended towards providing the required monetary impetus to the US residents to buy fuel efficient environment-sensitive vehicles by trading in their old, less-fuel efficient vehicles.
The program was an initiative undertaken by the US government with the following visions:
Provide new refined vehicles against old ones that jeopardise greenery and health.
Offer economic assistance to US consumers so that they are able to purchase environment-friendly fuel efficient vehicles and trade-in their vehicles that consume excess fuel and cause pollution.
Provide a boost to the economy by encouraging auto-sales at the same time ensuring fuel-efficient and neater vehicles on the roads.
ELIGIBILITY
The following were the chief eligibility criteria for the trade-in vehicles:
The trade-in vehicles should be in a drivable state.
On the trade-in date, the vehicles should not be more than 25 years old.
Trade in vehicles must be registered and they should by insured for the entire year preceding the exchange.
Scrapping of the eligible trade-in vehicles is required under this program and also the dealer must let the customer know the actual estimate of the scrap value of the trade-in vehicle. The scrap-value however little should be laced to the rebate.
The retail price of the new car under the program should not exceed $45,000 and the combined fuel economy value of the new car must be atleast 22 mpg for passenger- automobiles.
KEY FACTS AND FIGURES
The Cash for Clunkers program received phenomenal response from the US consumers. Its staggering popularity led to a fund-crunch on the part of the government; as a result the program has to be brought to an end on August 24, way before the anticipated date-November1, 2009. The following are the key facts that revolve around this initiative:
As per US media reports, the programme led to a total of 690,114 dealer transaction- submissions with a demand of $2.877 billion as rebates.
When the program came to an end, Toyota enjoyed about 19.4% of sales followed by brands like General motors, Ford, Honda and Nissan accounting for 17.6%, 14.4%, 13% and 8.7% of sales respectively.
According to reports furnished by The Department of Transportation the program had resulted in a 'commendable 58% fuel-efficiency improvement'.
HIGH DEMAND AND RESULTANT FUND CRUNCH
The Cash for Clunkers program attracted tremendous amount of attention from the buyers. Nevertheless, this very staggering popularity led to extraordinary demand on the part of the consumers. Consequently funds shrunk much before the anticipated date - about $1 billion had already got exhausted within July 31, 2009. However, the Congress government sanctioned an additional amount of $2 billion which kept the system going no longer than August24, 2009 due to extremely high demand.
The program happened to be lucrative for Japanese and Korean manufacturers. But in the process American car-makers experienced a decline in their market share.
The entire initiative was extensive though short-lived. Nevertheless, it did bring about public awareness about fuel efficiency and it also inculcated concern for a pollution free environment.
by: Tony Philip
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