A Guide To ‘Cash for Clunkers’

By Clint Williams
Green Right Now

Desperate automobile dealers are slashing sticker prices, passing on rebates and offering zero percent financing to move metal, making this a good time to buy a new car. And the good times are about to get better thanks to the federal “Cash for Clunkers” program kicking off later this month.

The Car Allowance Rebate System (CARS) signed into law last month is designed to help car makers and the environment by providing vouchers of $3,500 to $4,500 toward the purchase of a new vehicle in exchange for a gas-guzzling clunker. The program essentially inflates the trade-in value of older cars and trucks, providing drivers an incentive to go ahead and buy a new, more fuel-efficient rig right now.

Add the CARS voucher to existing tax credits and the generosity of Uncle Sam goes a long ways to paying for a new hybrid or clean-burning diesel vehicle.

Uncle Sam’s definition of a clunker is pretty specific, however. To qualify for a voucher your car must:

• have been manufactured in 1984 or later;
• have a combined city/highway fuel economy of 18 miles per gallon or less;
• be drivable;
• be owned and insured by you for at least a year.

The new vehicle can’t cost more than $45,000. If the car gets at least 22 mpg (combined city and highway mpg) the voucher is worth $3,500. If the new car gets 10 mpg better than the clunker you’re trading in the voucher is worth $4,500.

The bar is lower for new SUVs, vans and light-duty pickup trucks. The program offers $3,500 if the new vehicle gets at least 18 mpg combined and that is 2 mpg better than the old SUV, van or pickup. If the new vehicle gets 5 mpg better than the old, the voucher is $4,500.

The government voucher is paid directly to the dealer – your old car will be crushed.

The voucher is your down payment, so the program is useful to you only if the trade-in value of your vehicle is less than that of the voucher. Automobile shopping websites such as Edmonds and Kelly Blue Book have compiled lists of clunkers that are likely good candidates for the program.

The math is pretty simple when it comes to gauging the program’s benefits for car buyers. It’s less so when trying to estimate the environmental benefits.

“The fuel economy requirements are so lax in the final version that it’s hard to say with confidence that there will be net environmental benefits,” said Therese Langer, Transportation Program Director for the American Council for an Energy-Efficient Economy.

“That depends upon whether consumers really take advantage of the program to swap guzzlers for high efficiency vehicles or simply aim to satisfy the minimum mpg requirements,” Langer said.

Details of the program continue to evolve. Remember to check the official federal government website and stay away from other “cash for clunkers” websites that ask for any personal information.

Clunker to Cool

Here are some ideas for upgrading, while qualifying for the government kickback.

If you’re driving a 2001 Chrysler Town & Country minivan with an EPA estimated 17 mpg, you may want to consider a:

• 2009 Chrysler Town & Country minivan that gets a combined 20 mpg. The original minivan offers a rear seat table and plenty of storage.
• 2009 Honda Odyssey minivan (picture, right) that gets a combined 20 mpg. The best-handling minivan has a thoughtfully designed interior.
• 2009 Scion xB that gets a combined 24 mpg. No, it doesn’t have a third row and seating for seven, but do you want all those screaming kids back there anyway? Plenty of room for five people and their stuff.

If you’re driving a 1999 Ford Explorer sport utility vehicle with an EPA estimated 16 mpg, you may want to consider a:

• 2010 Mazda CX-7 that gets a combined 21 mpg. This rig puts the sport in SUV. Fun to drive and practical (though still pretty gas hungry).
• 2009 Ford Escape Hybrid that gets a combined 32 mpg, the top fuel efficiency in its SUV class. While smaller than the Explorer, it’s big enough for most families.
• 2009 Toyota Highlander Hybrid (picture, right) that gets a combined 26 mpg. Seating for seven usually means gas guzzler. Not so with this a midsize crossover SUV.

If you’re driving a 1996 3.3-liter Pontiac Grand Prix sedan with an EPA estimated 18 mpg, you may want to consider a:

• 2009 Chevrolet Malibu Hybrid that gets a combined 29 mpg. Concerns about driving cutting-edge technology are eased by an eight-year/100,000-mile warranty covering hybrid components.
• 2010 Ford Fusion Hybrid (picture, right) that gets a combined 39 mpg. Next-generation hybrid system can go more than 45 mph on electric-only power.
• 2009 Volkswagen Jetta TDI diesel that gets a combined 33 mpg. Comfortable and fun to drive, the Jetta TDI qualifies for a $1,300 federal tax credit for clean-burning diesels.

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