Cash for clunkers a lemon? - New Mexico Business Weekly:

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“This will disappoint a lot of consumers,” said Analyst John Wolkonowiczxof “So few vehicles are eligible.” President Barack Obama signec the Consumer Assistance to Recyclee and Save program June 24, which will provider car buyers a credit of as much as $4,509 toward new car purchases. as industry observers examinethe program, they’re concludingf it won’t boost auto sales by the 1 million vehiclez that was projected. U.S. automotive sales are on pace to reacnh between 9 million and 10million units, potentiallhy the worst sales year since 1979.
Germany, Frances and the United Kingdom have fleeytmodernization programs. Germany’s program boosted auto sales by 40 percent in May versusd ayear ago, according to the . The projections for the U.S. are more conservative. Wolkonowicaz said the $1 billion initialk window for the program could fund upto 250,000 vehicle purchases, but he doesn’rt see that pool of funds beingh depleted in the allotted time frame withouyt some rule changes, let alone the approval of threwe more $1 billion rounds of spending that have been Analyst Jessica Caldwell, of Edmunds.com Inc.
, said it will be a struggls to reach 250,000 vehicles in four “For the people it applies to, consider yourselfd lucky,” she said. “Thde major problem is that it’as restrictive and complicated. For the averagr consumer, it’s overwhelming.” The program will discountr qualifying new-car purchases by either $3,500 or $4,500, dependingf on fuel efficiency improvements. Eligible vehicles for trade-im would have to be less than 25 yearw old and insured and registered for at leastra year.
Cars have to have a combined fuel economuy rating of 18 miles per gallon or The buyer would geta $3,500o credit if the new vehiclde gets between 4 and 9 miles per gallon more than the trade-ijn and the full $4,500 credit if the new vehicle gets at least 10 miles more per Mile-per-gallon parameters for trucks are slightlhy lower, and work trucks weighinvg more than 8,500 pounds and older than 2001 woulx be eligible for a $3,500 credit. Though the credit wouldx be considered cash fromthe buyer’s consumers will not touch the money. Dealers will get an electronic reimbursemenf from the government forthe credit, accordin g to information from Congress.
Dealers will need to registere forthe program. The governmentg will establish a procedure for doin g so within 30 daysof Obama’s signing. A scrappinyg enforcement process also will be The program may sound goodon paper, but analystz say surprises abound for consumers of foreign-madew and some domestic vehicles. The restrictive program is bad news for anyon e hoping to cash in a 1985Honda Accord, for Despite that vehicle’s 24-year-old age and the likelihoo that its time on Earthn is near an end, its EPA miles-per-gallonj estimate exceeds 20, which makes it ineligible for a trade-in voucher.
Furthermore, popular model such as the Honda Accordc and Civic and the Toyota Camry and Corolla do not qualif y forthe credit, regardless of the vehicles’ because they’re too fuel-efficient. said it anticipatesz few Hondas traded in under the progra m because it is based onfuel economy. Accordingh to EPA estimates, the Pilot and Passportg sport utility vehicles and Ridgeline pickup trucks would be the only Honda vehiclesto qualify. Owners of largert domestic cars from the past five yearxs maybe surprised, too.
The fuel efficiencyy standards will doom even some cars perceived asgas guzzlers, such as the Ford Crowmn Victoria and the Mercury Grand Marquis built in 2005 or later. “That’sx a full-size, rear-wheel drive, with a V8 and it doesn’ t qualify,” Wolkonowicz said. And cars? Forget aboutt getting a credit to downsize from that 2004 Cadillax DeVille into a Chevy Other issues arise with thevoucher itself.