Consumers get green light for ‘Cash for Clunkers’
By Michael Kelly 
| July 27, 2009 | 5:01 AM
The Cash for Clunkers program allows car owners to trade up for a more fuel-efficient vehicle. (iStockphoto)
Hal Gorton wants to dump his 2000 Dodge Durango. The Denver resident loved the sport utility vehicle when he bought it used in 2005, but that was before gas hit $4 a gallon last year.
Now, even with gas prices closer to where they were four years ago, Gorton wants a truck with better fuel efficiency.
Well, Gorton is in luck. The federal government created the Car Allowance Rebate System — also referred to as “Cash for Clunkers” — to give owners a cash incentive to trade in their low-mileage vehicles for more fuel-efficient cars. Depending on the qualifications, consumers can get a $3,500 or $4,500 rebate when they trade in their car to buy or lease a new one.
“I’d do it in a New York minute,” Gorton said. “I need a better fuel-economy vehicle.”
On July 24, the Department of Transportation announced the final guidelines for the program, which was signed into law June 24 and runs through Nov. 1. The DOT has said that anyone who has traded in a qualifying car and bought a new one since July 1 is eligible for the rebate.
Based on the guidelines laid out at cars.gov, Gorton’s Durango is a good candidate because:
- He has clear title, the vehicle has been insured for at least one year, and it has been registered in his name for at least one year.
- The Durango was built in the past 25 years (nothing older than a 1985 model is eligible).
- The vehicle is in drivable condition.
- It has a city-highway fuel economy of less than 18 miles per gallon. Gorton’s SUV registers at a gas-guzzling 12 mpg.
Qualifying for the program is the first step; getting the new car or truck is next. How will Gorton upgrade?
For years, he drove pickup trucks, and after tooling around in an SUV for four years, he’s ready to go back — for two reasons. First, he can fit his 6-foot-5 frame into a pickup, and second, he says it’s a necessity living in Colorado.
“In this area, you can’t sacrifice power,” he said. “On a slick road, you have to have something that will dig in and get you up a hill.”
Gorton is interested in a 2009 Chevrolet Colorado. He couldn’t get the automatic eight cylinder model because the combined fuel economy is 16 mpg. With a category 1 truck (which includes SUVs and small- and medium-sized trucks), the combined fuel economy must be at least 18 mpg to qualify for the rebate. For passenger cars, the minimum fuel economy must be 22 mpg.
The rebate amount is determined by the increase in fuel efficiency. On category 1 trucks, the rebate is $3,500 for a 2 to 5 mpg increase and $4,500 for 6 mpg and more. Gorton is looking at receiving the full rebate.
Someone who buys a passenger car will get $3,500 if the increase in fuel efficiency is 4 to 10 mpg, and $4,500 if it’s 10 mpg and higher.
In addition, Gorton can still get extra discounts for his purchase. Dealer incentives are allowed under this program — anything but cash for trade-in value, because the vehicle will be crushed when it’s traded in.
Once Gorton decides on a truck, the dealer handles the paperwork. The credit will come off the top of the truck’s price, and about 10 days later, the government will reimburse the dealership.
Now that the program’s guidelines are in place, will cars start flying off lots? Joe Negri, AutoNation’s senior marketing director for the West, said he thinks business will start to increase immediately and that the first weekend in August will be busy.
“I expect a 5 to 10 percent lift in sales and a 40 percent increase in traffic,” he said. “It’s great for consumers because they can now get rid of the clunker they’ve been wanting to for a while.”
Prospective buyers need to bring in the title, registration and proof of insurance for their old car to get the ball rolling. Once they find a qualified vehicle, the dealer handles the rest.
That’s good news for Gorton, who says he can upgrade into a better vehicle and save money in the long run by ditching his Durango.
“I’ve got to get rid of this hunk of junk,” he said.
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