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Business & Technology

Congress ponders rebates for gas guzzlers to stimulate car sales

June 9th, 2009 12:00 am by Assocaited Press



WASHINGTON (AP) — Consumers could receive rebates of up to $4,500 for turning in their gas-guzzling cars and trucks for more fuel-efficient vehicles under a House proposal.


President Barack Obama has urged Congress to approve consumer incentives for new car purchases as part of the government's efforts to reorganize General Motors Corp. and Chrysler LLC through the bankruptcy courts.


The House proposal set for a floor vote Tuesday is aimed at stimulating car sales during a bleak period for the auto industry while increasing the nation's fleet of cars that get more miles to the gallon.


Rep. Betty Sutton, D-Ohio, the bill's chief sponsor, said the bill showed that "the multiple goals of helping consumers purchase more fuel efficient vehicles, improving our environment and boosting auto sales can be achieved."


GM and Chrysler have received billions of dollars in government aid, but the entire auto industry has watched car sales plummet during the past year. In May, overall sales were 34 percent lower than a year ago.


The vehicle scrappage bill has been under negotiations for months as lawmakers try to find a solution that boosts car sales while providing environmental benefits. Proponents have pointed to similar programs in Europe that have enhanced auto sales.


Separately, House and Senate appropriators were discussing providing $1 billion to a supplemental war funding bill for the "cash for clunkers" program, which aims to generate about 1 million new auto sales. Since the yearlong vehicle program is expected to cost $4 billion, lawmakers would attempt to find the additional money later this year.


Under the House bill, car owners could get a voucher worth $3,500 if they traded in a vehicle getting 18 miles per gallon or less for one getting at least 22 miles per gallon. The value of the voucher would grow to $4,500 if the mileage of the new car is 10 mpg higher than the old vehicle. The miles per gallon figures are listed on the window sticker.


Owners of sport utility vehicles, pickup trucks or minivans that get 18 mpg or less could receive a voucher for $3,500 if their new truck or SUV is at least 2 mpg higher than their old vehicle. The voucher would increase to $4,500 if the mileage of the new truck or SUV is at least 5 mpg higher than the older vehicle. Consumers could also received vouchers for leased vehicles.


Sen. Debbie Stabenow, D-Mich., has backed a similar version of the bill in the Senate, which has the support of automakers and their unions.


But a group of senators led by California Democrat Dianne Feinstein want an alternative version that would require consumers to trade up for more fuel-efficient cars and trucks to qualify. They complained that even a 2009 Hummer H3T, which gets 14 mpg in city driving and 18 mpg on the highway, could qualify for the incentives under the House bill.


Under Feinstein's plan, a passenger car owner's trade-in would need to get 17 mpg or less to qualify and only new passenger cars getting at least 24 mpg would be eligible. Owners could receive a $2,500 voucher for a new car that gets at least 7 mpg more than their old car. The voucher would increase to $3,500 for new cars with a 10 mpg improvement and $4,500 for new cars with a 13 mpg increase in fuel efficiency.


Old trucks, minivans and SUVs also would need to get 17 mpg or less under Feinstein's approach, and the new trucks, minivans and SUVs would need to get at least 20 mpg. The vouchers for the larger vehicles would also range from $2,500 to $4,500. The Feinstein plan would also provide a $1,000 voucher for the purchase of a used passenger car with a mileage of at least 24 mpg and a used truck or SUV with a mileage of at least 20 mpg.



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