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More cash for clunkers in the US

More please: The US government has approved another $2 billion to stimulate car sales.

President Obama signs off on $2b to keep clunker incentive scheme rolling

General News logo10 Aug 2009

FUNDING for the over-subscribed “cash-for-clunkers” car-buying incentive scheme in the US was tripled with the stroke of a pen when President Barack Obama signed into law a bill authorising a $2 billion ($A2.38b) extension last week.

The original $1 billion lasted barely days because car dealers built up a huge order bank of sales before the scheme was formally introduced in late July, draining the pot.

The rush also helped car-makers reduce their bulging inventories while kick-starting production of cars and parts at moribund factories paralysed by the global financial crisis.

On July 31, the US congress pushed through a bill authorising a further $2 billion to keep the scheme rolling a little longer, but the senate took a week to pass it on a 60-37 vote.

President Obama immediately signed the bill, saying more American consumers would have the chance to purchase newer, more fuel efficient cars and the American economy will continue to get a much-needed boost.

He said the cash-for-clunkers scheme was a proven success, helping consumers to buy more fuel-efficient vehicles and cut their annual fuel bills by up to $1000.

“They are getting the oldest, dirtiest and most air-polluting trucks and SUVs off the road for good,” he said.

“Businesses across the country – from small auto dealerships and suppliers to large auto manufacturers – are putting people back to work as a result of this program.” Major car-makers applauded the scheme, which provides incentives of up to $4500 ($A5360) for car and light truck buyers who trade up to more efficient vehicles.

In July, the decline of the US motor market slowed to just 12 per cent year on year – the smallest fall this year.

According to Automotive News, some dealers were almost cleared out of suitable stock by buyers looking to take advantage of the hand-out.

Ford’s inventory of vehicles was chopped from 57 days’ supply to 48 days in July, while General Motors stocks improved from 82 days to 64.

Non-clunker vehicles sales are reported to be the strong, providing hope that the market recovery will continue once the second shot of cash dries up.

In Germany, the police union claims that up to 50,000 cars meant for the crusher have ended up in Africa or eastern Europe as criminals abuse the scrappage system.

The union, BDK, estimates that between five and 10 per cent of all cars sent to scrapyards to be recycled had been bundled into containers for export.

The German finance minister has promised to look into the scam.

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