If you have been waiting to trade in an old gas guzzler to take advantage of the federal "Cash for Clunkers" program, it’s probably time to make a move. That is one of the main messages for consumers from Friday’s confusion over whether the initiative had burned through its original $1 billion budget in just one week. Washington’s Clunker Follies present consumers with both great opportunities to save money, and also many occasions to repeat the mantra "caveat emptor." Here are some questions about the program, and answers based on interviews with dealers, government officials and the rules of the incentive program.
Q: How much longer will the cash-for-clunkers program last?
A: That’s the problem: As of Friday, nobody appeared to know, including Congress or the Obama administration officials running the program. But many dealers say they plan to keep making cash-for-clunkers deals through the weekend, and the White House has assured consumers and dealers those transactions will be honored. That means dealers should get paid $3,500 or $4,500 for vehicles they scrap under the program, and deduct that amount from the price of a qualifying new car.
Q: Will there be more money put into the program to extend it?
A: The House of Representatives on Friday acted with unusual speed to approve a bill adding $2 billion to the program. Senate action is pending. Even with another $2 billion, the speed with which the first $1 billion was claimed suggests that the cash-for-clunkers well could run dry long before the program’s original Nov. 1 end date.
Q: Won’t the rush slow down? Why not wait a little and shop closer to the end of the model year when deals are better?
A: The production cuts auto makers ordered after sales collapsed last fall have left dealers with the skinniest inventories of unsold vehicles in years. That doesn’t mean there aren’t vehicles to buy — but the chances of finding what you want at a year-end clearance appear to be slimmer than they have been in years. There are also signs that car makers are intent on reducing discounts and raising prices headed into the new model year that starts officially Oct. 1.
Q: What qualifies as a "clunker?"
A: Shoppers looking to take advantage of the clunker deals have to sort through a series of requirements — and they’ll find that dealers are being meticulous about all of them — and the attendant paperwork — especially in light of the uncertainty about the amount of money left in the pot. The clunker-program rules require that shoppers show proof that they have owned, registered and insured their clunker continuously for a year. It doesn’t matter how many miles are on the vehicle’s odometer, or whether the vehicle is a sedan, a sport-utility vehicle, a minivan or a truck. What does matter is that a vehicle has to have been rated when new at 18 miles per gallon or less in combined city and highway driving, according to the Environmental Protection Agency.
Q: How do I determine my vehicle’s mileage rating?
A: The easiest way is to go to the EPA’s www.fueleconomy.gov site. But the figures printed on the old window sticker probably aren’t correct. The EPA late last week released revised mileage figures that changed the eligibility—pro and con — for more than 150 models.
Q: What if I made a cash-for-clunkers deal with a car that isn’t eligible because of the EPA mileage changes?
A: The Transportation Department said this week that people who made clunker deals on or before the July 24 date of those EPA revisions will be allowed to go forward, even if their car is no longer eligible. But it appears to be tough luck for those who had one of the now-ineligible cars and didn’t make a deal by that date.
Q: Do I have to pay sales taxes on the amount of the cash-for-clunkers voucher?
A: That depends on the state. Some states are charging sales tax on new vehicles as if the value of the clunker voucher had not been deducted from the price.
Q: Could Congress change the program again, if it adds new money?
A: That is one fear among auto dealers, car makers and their allies. Some members of Congress have said that to make a bigger impact on U.S. oil consumption and help the environment, any new clunker money should come with new rules that compel consumers to buy higher-mileage new vehicles. Currently, the rules require that a new vehicle purchased with the help of a government voucher average at least 22 miles per gallon if it’s a passenger car, and at least 18 miles per gallon for light trucks — pickups, minivans and SUVs.
Q: Where can I get more information?
A: Consumers can find details about the cash-for-clunkers program — including the 136-page formal rules governing such issues as whether customers have to pay sales taxes on the clunker-voucher amounts (that varies by state) and how dealers have to disable vehicles and scrap them to receive their money — at the government’s www.cars.gov site.
The Wall Street Journal