The popular "Cash for clunkers" program is going to get a refill. The White House announced this morning that it would seek ways to keep the initiative alive. The U.S. House of Representatives voted to add an additional $2 billion into the "cash for clunkers" program. The bill was approved on a vote of 316-109.
Cash for clunkers, otherwise known as the Car Allowance Rebate System, offered owners of older, gas-guzzling cars and trucks $3,500 to $4,500 toward a new fuel-efficient models. The program, which was originally slated to receive $4 billion in funding, only got $1 billion.
That number proved to be awfully small as the program, which was expected to run through Nov. 1, ran out of cash in only a week. Should Congress scrape up the additional funds, it would help auto marketers, albeit to a small degree, said Ed Kim, director, industry analysis at the consultancy AutoPacific. "It does have the potential to get people thinking about buying vehicles again. That certainly happened this week," he said.
Car industry sales were off 35 percent during the first half of the year compared to 2008, per reports. How much of an impact an additional $2 billion will have in reversing this trend remains to be seen. "I can imagine there will be some lift for the industry, but not a ton," said Kim. "Perhaps this and the fact that there are signs that an economic recovery is around the corner could ultimately be a part of helping the industry come back to health." Information about the offer can be found at Cars.gov.
Still, the clunkers program alone can't do it, said Kim: "It will not have a significant impact on overall volume this year which was the intent of the legislation." And if it receives the influx of cash, Kim said, "then it will basically last for three weeks instead of one."