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'Cash for Clunkers' underway

The controversial ‘Cash For Clunkers’ scheme has been signed off by President Obama in the USA.

Under this scheme the US Government will help buyers pay for a more fuel efficient car or truck if they trade in a less fuel efficient vehicle.

Whilst it has been widely welcomed by the motor trade it does have its detractors.

A generous trade-in allowance will be applied to the used vehicle, but conditions apply, and that’s where the controversy sets in.

In simplified terms, here’s what happens


The trade in vehicle must be between 8 and 25 years old.

2. The trade in vehicle must have a fuel economy of 18 mpg or less

3. The trade in vehicle must be scrapped.

4. The new vehicle cannot have a recommended price exceeding $45,000 US.

5. The new vehicle must have an economy value of at least 22mpg (cars), or 18mpg (smaller trucks).

If the new vehicle rates at 10mpg better than the trade in then the Government will give the customer $4500 for the scrapped vehicle.

This is a temporary measure, but it has been much applauded by the motor trade as an effective and greenie friendly stimulus package.

However it does have its detractors.

The detractors say:-

1. It’s wrong to include imported new vehicles in the scheme, it should solely promote local manufacturers.

2. It encourages exactly the wrong people to participate, those with old, virtually worthless vehicles and they can’t afford a brand new vehicle. 

3. The special allowance is more than compromised by the greenhouse emissions impact of making a new vehicle.

4. The cost is far too much to benefit far too few.

But, of course, the US car producers are in such dire straights that any initiative will be warmly welcomed, and this is one of them.

Will it spread to Australia?

Well, Germany already has a similar stimulus, and it’s pretty certain that these schemes will be closely monitored by the Australian Government, but, as such a high proportion of our cars are imported, a similar scheme would be unlikely to produce such a profound benefit.