Dealers will decide which new car buyers receive trade-in allowances of up US$4,500 against new vehicle purchases under the $1bn federal “cash for clunkers” programme US president Barack Obama signed into law this week, a government agency said. Meanwhile, the American International Automobile Dealers Association (AIADA) on Thursday claimed criminals and some “unscrupulous” dealers were already using it to dupe consumers.
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The initiative, intended to help reverse a sharp slide in US auto sales this year,will take effect late next month under the direction of the US transportation department. Congress funded the programme to 30 September. Proponents hope the measure prompts up to 250,000 vehicle sales, which are running at an annual rate of just under 10m for 2009, Reuters reported.
“It’s complex and not like anything we’ve ever run before,” National Highway Traffic Safety Administration spokesman Rae Tyson told the news agency. “We’re starting from scratch.”
Tyson said some details still needed to be finalised but key elements were already in place for dealers to offer consumers up to $4,500 toward a new, more fuel efficient car when they trade in an older model with worse fuel economy. There is also a 25-year age limit on older vehicles and those driven to a dealer for credit must have been owned by the new car buyer for at least a year.
The government was working on a plan to ensure that the trade-in vehicle was not resold, the report said.
“Dealers already have mechanisms for disposing of vehicles that they don’t want to resell. We’re going to require some fool-proof means of proving that the vehicle will never be on the road again,” Tyson said.
One option may require dealers ensure that the engines or other key components are removed from the older vehicles.
Meanwhile, AIADA, citing a CNN Money report, warned some purported ‘cash for clunkers’ websites were asking consumers to provide personal information, including names, addresses, and social security numbers, so they could ‘register’ for the programme while other websites told potential car buyers they would put them in touch with authorised ‘cash for clunkers’ dealers in their area.
AIADA said car dealers would have to register to participate in the programme but the registration process had not yet begun.
“In fact, the NHTSA hasn’t even determined how the registration process will work. There will be no need for consumers to register at all,” the dealer group said.
“One clue that websites aren’t real is if they use the name ‘cash for clunkers’. That is not the real name of the programme, which is officially known as the ‘car allowance rebate system’.
AIADA recommends potential buyers use an official NHTSA web site to learn about the programme. The government agency has also set up a consumer advice hotline.
