As “Cash for Clunkers” Sputters, a Privately Funded Spinoff Picks Up

The U.S. DOT began signaling yesterday that it would bring the "cash for clunkers" program to an end amid growing unease from auto dealers about the government's slow pace of reimbursement and General Motors' decision to begin fronting "clunkers" repayments to its own salesmen.

(Photo: AmericaJR.com)

But with auto-industry forecasters predicting
a cool 1 million new sales this month for the first time in a year,
dealers are loath to abandon the "clunkers" concept that has stoked
Americans' desire for new vehicles -- with minor fuel-efficiency gains and expensive environmental payoffs.

A group of auto retailers have begun promoting the "Auto Stimulus Plan," a rebate system paid for by dealers themselves.

The
private "clunkers" spinoff offers several features that the government
plan was criticized for lacking. It allows consumers to buy used cars,
and its rebates are tiered in proportion to the level of
fuel-efficiency improvement that is achieved by the trade-in.

The
specifics of the Auto Stimulus Plan vary based on state regulations.
But a trade-in that provides 2 miles per gallon in greater
fuel-efficiency would earn a rebate of 10 percent of the older car's
value, and a 5-mpg improvement would earn a 20 percent rebate,
according to a recent Associated Press report.

Unlike the Obama administration's "clunkers" program, which was questionably touted
by the president and his allies as a boon for the environment, dealers
involved in the private version make no bones about their priorities.

"[O]ur
primary goal is to help consumers that don't qualify for the
government's program and to stimulate the economy through improved
sales, jobs, and spending," Scott Gruwell, an Arizona-based GM dealer,
said in a statement today announcing that the Auto Stimulus Plan would
continue despite the demise of the "clunkers" plan.