• The value of the credit for the purchase or lease of the new passenger car depends on the difference between the combined fuel economy of the vehicle that is being traded in and that of the new vehicle that it being purchased or leased. For example, if a new passenger vehicle has a combined fuel economy that is at least 4 mpg but less than 10 mpg higher than the traded-in vehicle, the credit is $3,500. If the new vehicle has a combined fuel economy value that is at least 10 miles per gallon higher than the traded-in vehicle, the credit is $4,500. Truck rebates fall under similar rules, but the mpg differentials are different.
• Trade-in vehicles have to be crushed or shredded so it cannot be resold. Recyclers can sell some parts, but none that are related to the engine and transmission, which have to be disabled immediately after trade-in.
• Program runs through Nov. 1, 2009 or when the $1 billion in funds are exhausted, whichever comes first.
Patterned after successful European initiatives
With its CARS program the U.S. follows the lead of several European countries, which initiated significant scrappage incentive programs earlier this year.
Germany was the first off the mark, launching its program in January 2009. It has been, and continues to be, very successful. Much of its success has been attributed to its simplicity and its relatively large incentive rate. Owners of vehicles nine years old or older can receive a rebate of 2,500 Euros (about $4,150 Canadian) toward the purchase of any new vehicle, as long as that new vehicle meets current Euro 4 emission standards.
During its first full month (February), new vehicle sales in Germany rose 21.6 percent, while the total EU light vehicle market declined 17.7 percent. The program’s budget was initially set at 1.5 billion Euros, but the program was so popular and successful that the budget has since been increased to 5.0 billion Euros and the duration of the program extended to the end of 2009.
That initial cap (1.5 billion Euros, good for about 600,000 vehicles), created an element of competition among consumers, and was seen as another one of the prime drivers of the program's success.
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• Trade-in vehicles have to be crushed or shredded so it cannot be resold. Recyclers can sell some parts, but none that are related to the engine and transmission, which have to be disabled immediately after trade-in.
• Program runs through Nov. 1, 2009 or when the $1 billion in funds are exhausted, whichever comes first.
Patterned after successful European initiatives
With its CARS program the U.S. follows the lead of several European countries, which initiated significant scrappage incentive programs earlier this year.
Germany was the first off the mark, launching its program in January 2009. It has been, and continues to be, very successful. Much of its success has been attributed to its simplicity and its relatively large incentive rate. Owners of vehicles nine years old or older can receive a rebate of 2,500 Euros (about $4,150 Canadian) toward the purchase of any new vehicle, as long as that new vehicle meets current Euro 4 emission standards.
During its first full month (February), new vehicle sales in Germany rose 21.6 percent, while the total EU light vehicle market declined 17.7 percent. The program’s budget was initially set at 1.5 billion Euros, but the program was so popular and successful that the budget has since been increased to 5.0 billion Euros and the duration of the program extended to the end of 2009.
That initial cap (1.5 billion Euros, good for about 600,000 vehicles), created an element of competition among consumers, and was seen as another one of the prime drivers of the program's success.
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