Car Allowance Rebate System

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The Car Allowance Rebate System (CARS), colloquially known as "Cash for Clunkers", was a $3 billion U.S. federal scrappage program intended to provide economic incentives to U.S. residents to purchase a new, more fuel-efficient vehicle when trading in a less fuel-efficient vehicle. The program was promoted as providing stimulus to the economy by boosting auto sales, while putting safer, cleaner and more fuel-efficient vehicles on the roadways. Although the program officially started on July 1, 2009, the processing of claims did not begin until July 24, and the program ended on August 24, as the appropriated resources were exhausted. The deadline for dealers to submit applications was August 25. According to estimates of the Department of Transportation, the initial $1 billion appropriated for the system was exhausted by July 30, 2009, well before the anticipated end date of November 1, 2009, due to very high demand. In response, Congress approved an additional $2 billion. On August 26 the DoT reported that the program resulted in 690,114 dealer transactions submitted requesting a total of $2.877 billion in rebates. At the end of the program Toyota accounted for 19.4 % of sales, followed by General Motors with 17.6 %, Ford with 14.4 %, Honda with 13.0 %, and Nissan with 8.7%. It led to a gain in market share for Japanese and Korean manufacturers at the expense of American car makers, with only Ford not taking a significant hit. Meanwhile, Japan's own program excluded U.S. cars. The Department of Transportation also reported that the average fuel efficiency of trade-ins was 15.8 mpg (miles per gallon), compared to 24.9 mpg for the new cars purchased to replace them, translating to a 58% fuel efficiency improvement. A study published after the program by researchers at the University of Delaware concluded that for each vehicle trade, the program had a net cost of approximately $2,000, with total costs outweighing all benefits by $1.4 billion. Another study by researchers at the University of Michigan found that the program improved the average fuel economy of all vehicles purchased by 0.6 mpg in July 2009 and by 0.7 mpg in August 2009. To ensure that vehicles traded-in under "Cash For Clunkers" will not be resold by dealers, the program outlines a procedure for destructively disabling the engine (and thus also precluding the possibility that any mechanical engine components might be salvaged to be used in the repair of any other vehicles): The motor oil is drained and replaced with a sodium silicate solution, then the engine is started and run until the solution, becoming glass-like when heated, causes engine internals to abrade and ultimately seize. In addition, the salvage or scrap facility which acquires the vehicle cannot sell any powertrain components from the scrap vehicle. This includes the disabled engine (most specifically the long block components), the transmission/transaxle, and in some cases the axle assemblies. The salvage or scrap facility can sell any other component from the scrap vehicle until they are ready to crush and/or shred the vehicle. The salvage or scrap facility has 180 days to ultimately crush and/or shred the vehicle. [READ THE REST OF THIS ARTICLE]





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