Scrappage: US to get Cash for Clunkers

Although the figures for the UK Scrappage Scheme didn’t shine in May, it’s reckoned that they will have a big impact on June sales. Some budget car makers like Hyundai are claiming the Scrappage Scheme to be a big success for them. Of course, the Scrappage allowance is proportionately bigger the cheaper the car, although as we reported recently two guys did manage to acquire Nissan GT-Rs with the Scrappage £2,000.

So even though our Scrappage Scheme is pretty flawed, it may well be having an impact – at least until the relatively modest amount set-aside for the scheme by the Government is exhausted. And now it’s the turn of the US to launch a Scrappage Schem – Cash for Clunkers.

Cash for Clunkers legislation was passed yesterday in the US to try and kick-start US car sales, and give a boost to beleaguered car makers like GM and Chrysler. But the structure is different to our own system. Basically, if you trade in a car that does less than 18mpg (US) for one that does more than 22mpg you get a $3,500 allowance. And if your new car betters your old car’s consumption by more than 10mpg you get $4,500. If the trade-in is an SUV, Pick-up or People Carrier you get $3,500 if your new wheels get 2mpg more and $4,500 if they get 5mpg more.

The trade-in has to be less than 25 years old and have been insured in the last 12 months. Dealers will be obliged to scrap the trade-in – and prove it.

This scheme seems to be a little better drafted than out own. The US Government reckons there are 25 million eleigible cars in the States, so the potential is pretty huge. No word on whether this scheme is limited by a fixed fund (as ours is) or whether it is there regardless of how many customers use  it.

Be interesting to see how big a kick-start this gives to the US car market.

Source: AP via  Autoblog