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Cash for Clunkers

As “Cash for Clunkers” Sputters, a Privately Funded Spinoff Picks Up

8:51 AM PDT on August 20, 2009

The U.S. DOT began signaling yesterday that it would bring the "cash for clunkers" program to an end amid growing unease from auto dealers about the government's slow pace of reimbursement and General Motors' decision to begin fronting "clunkers" repayments to its own salesmen.

new_car_dealers.jpg(Photo: AmericaJR.com)

But with auto-industry forecasters predicting a cool 1 million new sales this month for the first time in a year, dealers are loath to abandon the "clunkers" concept that has stoked Americans' desire for new vehicles -- with minor fuel-efficiency gains and expensive environmental payoffs.

A group of auto retailers have begun promoting the "Auto Stimulus Plan," a rebate system paid for by dealers themselves.

The private "clunkers" spinoff offers several features that the government plan was criticized for lacking. It allows consumers to buy used cars, and its rebates are tiered in proportion to the level of fuel-efficiency improvement that is achieved by the trade-in.

The specifics of the Auto Stimulus Plan vary based on state regulations. But a trade-in that provides 2 miles per gallon in greater fuel-efficiency would earn a rebate of 10 percent of the older car's value, and a 5-mpg improvement would earn a 20 percent rebate, according to a recent Associated Press report.

Unlike the Obama administration's "clunkers" program, which was questionably touted by the president and his allies as a boon for the environment, dealers involved in the private version make no bones about their priorities.

"[O]ur primary goal is to help consumers that don't qualify for the government's program and to stimulate the economy through improved sales, jobs, and spending," Scott Gruwell, an Arizona-based GM dealer, said in a statement today announcing that the Auto Stimulus Plan would continue despite the demise of the "clunkers" plan.

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