From AAIA Capital Report
Following a May 5 meeting at the White House to discuss the status of climate change legislation, House Democrats announced an agreement on a "Cash for Clunkers" bill. The agreed-upon proposal would provide vouchers to Americans for one year to encourage the purchase of about one million cars and trucks and the destruction of a similar number of fuel inefficient older vehicles.
While language for the proposal has yet to be released, the general outline of the agreement would permit a person to trade in a car obtaining less than 18 miles per gallon (mpg) to receive a voucher for the purchase of a new car. The proposal specifies that if the mileage of the new car is at least four 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 would be worth $4,500.
For light trucks or sport utility vehicles (SUVs), the vehicle scrapped also must obtain 18 mpg or less. A $3,500 voucher could be obtained by a car owner if the new light truck or SUV obtains at least two mpg higher than the scrapped truck and a $4,500 voucher if the new vehicle gets five mpg or higher than the vehicle turned in. The proposal also would establish a "Cash for Clunkers" program for "large light-duty trucks," such as pick-ups and vans weighing between 6,000 and 8,500 pounds, as well as "work trucks," which weigh between 8,500 and 10,000 pounds.
House Democrats currently plan to include the "Cash for Clunkers" proposal as part climate change legislation, now being developed by Rep. Henry Waxman (D-Calif.), and Ed Markey (D-Mass.). Waxman has announced that he wants to have a global warming bill passed by the House Energy and Commerce Committee before the Memorial Day recess, which is scheduled to begin on May 22. However, the bill has been stalled over differences among Democrats over several issues including a renewal electricity standard, distribution of emissions allowances among electric utilities and global warming emissions reduction targets.
Concerned that the Memorial Day goal may not be met, Waxman announced last week that he may bypass consideration by the Subcommittee on Energy and Environment and move straight to the full Energy and Commerce Committee, a move strongly opposed by many members of the subcommittee.
While the "Cash for Clunkers" proposal appears to have strong support from the president and congressional leaders, it is unclear as to what will occur if a global warming bill does not move ( i.e., would Democrats attempt to move "Cash for Clunkers" as a stand-alone bill). The Senate also is expected to consider a proposal, but details of how that will occur have not been disclosed by Senate leaders as of yet.
While AAIA continues to oppose "Cash for Clunkers" legislation, the association is working with legislators to ensure the availability of the used parts before the vehicles are crushed. Current legislation in the House and Senate would require that the engine and drive train including the transmission be crushed on all vehicles turned in under the program.
Editor’s Note: The Automotive Suppliers Association (ASA) also yesterday issue a statement regarding the proposal, specifically addressing the lack of a repair clause in the bill.
In a letter to members of Congress, ASA noted: “ASA members are small businesses all across America, actively engaged in their communities, employing a tremendous number of technicians and office personnel. A fleet modernization program without a repair option could be devastating to independent repairers. Arbitrarily removing older vehicles from America’s highways would take vehicles out of independent repair bays, costing jobs and potentially closing small businesses. A repair option tied to higher-emitting vehicles is the most cost-efficient, consumer-friendly approach to a fleet modernization program. This option would also allow low-income vehicle owners who don’t have the resources for a new vehicle to now have a dependable, lower-emission vehicle.”
