FYI...

TMT


Autos: Cash for Clunkers Advances
By David Kiley David Kiley Wed May 6, 8:08 am ET

Congress on Apr. 5 took a big step toward giving consumers with older,
gas-thirsty cars and trucks up to $4,500 to buy a new, more fuel-
efficient vehicle.

The legislation is meant to give incentives to consumers to dump their
gas hogs. But more important, it is designed to give struggling
automakers and their suppliers a shot in the arm by boosting sales
this year by as many as 1 million new vehicles. April auto sales
tracked at an annualized rate of 9.32 million cars and trucks, down
34% from a year earlier. Automakers and industry analysts have been
projecting that total sales this year will be between 9.5 million and
10.5 million vehicles.

The sales dive has propelled Chrysler into bankruptcy, with General
Motors (NYSE:GM - News) threatening to follow. Other automakers also
have made deep cuts in production, laid off workers, and even delayed
the opening of new manufacturing facilities. "By stimulating consumer
demand for new vehicles, this proposal will directly benefit domestic
autoworkers and automotive manufacturers, which have arguably been
hardest hit by the current economic downturn," said Representative
John Dingell (D-Mich.), a co-sponsor of the bill.

Consumers on the Sidelines

The idea of a "cash for clunkers" bill has been kicking around
Washington for three months. Germany, France, and the United Kingdom
have enacted similar programs in recent months. In Germany, the
measure boosted sales by more than 20%.

Automakers are anxious to get a bill finalized because, they say,
chatter about it over the past month has kept consumers on the
sidelines waiting for the new incentives.

"We are encouraged that President Obama and Congress have reached a
compromise on consumer-incentive legislation that will help jump-start
auto sales and the U.S. economy, while also providing environmental
benefits and increasing energy security," said Ziad Ojakli, Ford's
(NYSE:F - News) group vice-president for government and community
relations. "A program like this is needed now -- a point that was
reinforced by April's auto sales reported last Friday."

All Automakers on an Equal Footing

President Obama pushed the idea in a speech he gave on Mar. 30, in
which he laid out the White House plans for helping to restructure
Chrysler and GM. But the clunker bill was hung up over details. Many
elected officials wanted to give preferred treatment to vehicles built
in the U.S., offering lesser incentives for vehicles built in Canada
and Mexico, and no benefits to imported vehicles. Environmentalists
wanted tougher language that would compel car buyers to trade sport-
utility vehicles for much more fuel-efficient cars, not just new SUVs
with slightly improved fuel economy.

As it turned out, the House bill puts all auto manufacturers on equal
footing. Previous bill language specified that vehicles had to be nine
years or older to qualify; the compromise language does not specify
the age of the trade-in vehicle, but sets gas-mileage requirements for
old cars and trucks to qualify, and doles out money based on how much
more mileage the new vehicle gets. There's no cost cap on the bill
yet, but it would be in effect for a year and would be funded to
support the purchase of 1 million new vehicles, giving it a total cost
of $3 billion to $4 billion.

"We're pleased that the plan will allow equal participation from all
manufacturers," said Charles Territo, spokesman for the Alliance for
Automobile Manufacturers, a lobbying group that represents both U.S.
and foreign-owned automakers and which derided earlier attempts to put
imported cars -- such as Toyota's (NYSE:TM - News) Prius gas-electric
hybrid and gas-sippers from Hyundai, Nissan (NasdaqCM:NSANY - News),
and Honda (NYSE:HMC - News) -- at a disadvantage.

Waiting for the Senate

The Senate is expected to draft an identical bill, which should pass
and get signed into law by President Obama. The original plan was to
attach it to a larger piece of legislation that would deal with
climate change. But House Energy and Commerce Committee Chairman Henry
Waxman (D-Calif.) doesn't have the votes yet to get that carbon-
reduction bill out of his committee. So it's possible the clunker
legislation will have to find another way to get to the President's
desk.

Environmentalists are hoping that the Senate version of the bill will
push the fuel-efficiency requirements of the new cars a bit higher.
"The legislation was designed to boost sales as well as create a
meaningful reduction in CO2 emissions, but this House bill leans
heavily to boosting sales first," said Ann Mesnikoff, the Sierra
Club's chief analyst for green transportation.

For now, here is how the House version of "cash for clunkers" would
work:

-- For passenger cars: The old vehicle must get less than 18 mpg. New
passenger cars with mileage of at least 22 mpg are eligible for
vouchers. If the mileage of the new car is at least 4 mpg higher than
the old vehicle, the voucher will be worth $3,500. If the mileage of
the new car is at least 10 mpg higher than the old vehicle, the
voucher will be worth $4,500. So a person trading in a 2000 Subaru
Legacy, for example, that gets 22 mpg, for a Ford Fusion Hybrid, which
gets 37 mpg, would get the maximum benefit.

-- For small trucks and SUVs: The old vehicle must get less than 18
mpg. New small trucks or SUVs with mileage of at least 18 mpg are
eligible for vouchers. If the mileage of the new truck or SUV is at
least 2 mpg higher than the old vehicle, the voucher will be worth
$3,500. If the mileage of the new truck or SUV is at least 5 mpg
higher than the old vehicle, the voucher will be worth $4,500. Thus,
someone with an old Ford Explorer that gets 16 mpg could trade for a
Ford F Series pickup that gets 18 mpg and get $3,500.

-- Large light-duty trucks: The old vehicle must get less than 18 mpg.
New large trucks (pickups and vans weighing 6,000 to 8,500 lbs.) with
mileage of at least 15 mpg are eligible for vouchers. If the mileage
of the new truck is at least 1 mpg higher than the old truck, the
voucher will be worth $3,500. If the mileage of the new truck is at
least 2 mpg higher than the old truck, the voucher will be worth
$4,500.

-- Work trucks: Consumers can trade in a pre-2002 work truck (defined
as a pickup truck or cargo van weighing 8,500 to 10,000 lbs.) and
receive a voucher worth $3,500 for a new work truck in the same or
smaller weight class. There will be a finite number of these vouchers
based on the market share of this vehicle class. There are no
Environmental Protection Agency mileage measures for these trucks.
However, because newer models are cleaner than older models, the age
requirement ensures that the trade will improve environmental quality.
Consumers can also "trade down," receiving a $3,500 voucher for
trading in an older work truck and purchasing a pickup or van weighing
between 6,000 to 8,500 lbs.

Too_Many_Tools wrote:
FYI...
Autos: Cash for Clunkers Advances
By David Kiley David Kiley Wed May 6, 8:08 am ET

For now, here is how the House version of "cash for clunkers" would
work:

-- For passenger cars: The old vehicle must get less than 18 mpg. New
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
passenger cars with mileage of at least 22 mpg are eligible for
vouchers. If the mileage of the new car is at least 4 mpg higher than
the old vehicle, the voucher will be worth $3,500. If the mileage of
the new car is at least 10 mpg higher than the old vehicle, the
voucher will be worth $4,500. So a person trading in a 2000 Subaru
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
Legacy, for example, that gets 22 mpg, for a Ford Fusion Hybrid, which
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ ^^^^^^^^^^^^^
gets 37 mpg, would get the maximum benefit.

Is it just me, or does the above example seem to not fit the first
condition? Makes me wonder what this legislation *really* says
and how it will be implemented. Like, how is the gas mileage of
the old car going to be determined? Based on its EPA sticker when
new? Afadavit from the owner?

My wife has an '89 Subaru that I'd love to take off the road
and replace with something new, but I'm not sure it would meet
the 18 mpg figure, but the car in the example doesn't either.

I guess I'll just have to wait and see.

Bill Ranck
Blacksburg, Va.

On May 7, 10:10*am, wrote:
Too_Many_Tools wrote:
FYI...
Autos: Cash for Clunkers Advances
By David Kiley David Kiley Wed May 6, 8:08 am ET
For now, here is how the House version of "cash for clunkers" would
work:
-- For passenger cars: The old vehicle must get less than 18 mpg. New

* * * * * * * * * * * * *^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ passenger cars with mileage of at least 22 mpg are eligible for
vouchers. If the mileage of the new car is at least 4 mpg higher than
the old vehicle, the voucher will be worth $3,500. If the mileage of
the new car is at least 10 mpg higher than the old vehicle, the
voucher will be worth $4,500. So a person trading in a 2000 Subaru

* * * * * * * * * * * * * * * * ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ Legacy, for example, that gets 22 mpg, for a Ford Fusion Hybrid, which

* ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ ^^^^^^^^^^^^^

gets 37 mpg, would get the maximum benefit.

Is it just me, or does the above example seem to not fit the first
condition? *Makes me wonder what this legislation *really* says
and how it will be implemented. *Like, how is the gas mileage of
the old car going to be determined? *Based on its EPA sticker when
new? *Afadavit from the owner?

My wife has an '89 Subaru that I'd love to take off the road
and replace with something new, but I'm not sure it would meet
the 18 mpg figure, but the car in the example doesn't either.

I guess I'll just have to wait and see.

Bill Ranck
Blacksburg, Va.

My guess is the EPA sticker number.

TMT

Same stupid thing on light trucks. Must have at least 18 mpg and
........new at least 2 more.

wrote:
Too_Many_Tools wrote:
FYI...
Autos: Cash for Clunkers Advances
By David Kiley David Kiley Wed May 6, 8:08 am ET

For now, here is how the House version of "cash for clunkers" would
work:

-- For passenger cars: The old vehicle must get less than 18 mpg. New
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
passenger cars with mileage of at least 22 mpg are eligible for
vouchers. If the mileage of the new car is at least 4 mpg higher than
the old vehicle, the voucher will be worth $3,500. If the mileage of
the new car is at least 10 mpg higher than the old vehicle, the
voucher will be worth $4,500. So a person trading in a 2000 Subaru
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
Legacy, for example, that gets 22 mpg, for a Ford Fusion Hybrid, which
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ ^^^^^^^^^^^^^
gets 37 mpg, would get the maximum benefit.

Is it just me, or does the above example seem to not fit the first
condition? Makes me wonder what this legislation *really* says
and how it will be implemented. Like, how is the gas mileage of
the old car going to be determined? Based on its EPA sticker when
new? Afadavit from the owner?

My wife has an '89 Subaru that I'd love to take off the road
and replace with something new, but I'm not sure it would meet
the 18 mpg figure, but the car in the example doesn't either.

I guess I'll just have to wait and see.

Bill Ranck
Blacksburg, Va.