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'Cash for Clunkers' Plan Looks to Increase MPG

May 07, 2009

A compromise "Cash for Clunkers" plan being debated in Congress would give consumers up to $4,500 if they turn in their old car and buy a new, more fuel-efficient replacement, according to a New York Times blog by Ken Belson. 

Under the plan, which includes elements of two competing bills in the House and another in the Senate, consumers can turn in cars or light-duty trucks that get less than 18 miles a gallon. If they buy cars with mileage ratings of at least four miles a gallon more than their old cars, they will receive a voucher worth $3,500. If they buy cars that get at least 10 miles a gallon more than their old car, they receive $4,500. They can get vouchers for turning in light-duty trucks, large light-duty trucks and work trucks as well. 

Owners of any "work truck"-pre-2002 pickups and vans weighing 8,500 to 10,000 pounds-would be eligible for a $3,500 voucher to be used in the purchase of "a new work truck in the same or smaller weight class, since newer vehicles tend to be more fuel efficient."

Congressional Democrats expect about 1 million older cars to be taken off the road. CNW Research said about 1.3 million vehicle owners "would be likely to take advantage of the clunker voucher program." 

President Obama has said he supports a clunkers plan. 

The plan calls for cars to have a combined fuel rating of 22 miles a gallon. The American Council for an Energy-Efficient Economy, a nonprofit group, issued a press release on May 6 saying the plan's fuel standards were too low. 

"Federal incentives should promote vehicles with above-average fuel economy, at a minimum, so that American consumers are better prepared for the higher gasoline prices that are likely to return once the current recession ends," said Steven Nadel, the group's executive director. 

Still, the domestic auto industry appears eager for this type of plan. General Motors said in a statement that scrappage programs implemented in other countries around the world have proven to be successful in reinvigorating car and truck sales.

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