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Cash For Clunkers Runs Out Of Cash

The one billion dollars allocated to President Obama’s ‘Cash for Clunkers’ scheme has already been exhausted just a few weeks after its introduction.

Officially called the Car Allowance Rabate System, or CARS, the Obama initiative is designed to help both the US economy and the environment by offering generous trade-ins for old gas guzzlers in exchange for new fuel efficient cars and trucks. Owners receive federal subsidies of up to US$4500 for their old vehicles.

The uptake of this scheme has taken bureaucracy by surprise, so the House Of Representatives has rushed through a bill to allocate a further two billion dollars to the scheme, which now awaits imminent Senate approval.

House Majority Leader Steny Hoyer said the money for the programme would come from funds previously approved as part of the economic stimulus bill.

US car dealers at last have broad smiles on their faces as buyers are returning to the new car lots after a series of tumultous shocks rocked the US car industry, culminating in General Motors and Chrysler filing for Chapter 11 Bankruptcy.

The CARS initiative certainly seems to be working as the Ford Motor Company has just reported its very first year on year monthly sales increase in July in the US, which they attributed solely to the CARS programme.

Increased sales were also reported by Hyundai and Suburu, but  whilst Chrysler and GM also noted an uplift, they did not match sales from July ’08. 

US results mirrored those experienced by Germany, who introduced a similar scheme at the beginning of the year which boosted sales by up to 20 per cent and prompted Obama to act in the US.

In Australia the motor industry sales have been boosted by a different initiative in the form of tax incentives.

Extra tax rebates of 30 percent for big busines (which expired on June 30) and small business (which continues to Dec 31st) has put fresh impetus into vehicle sales for some manufacturers in the last three months.