House Approves Incentives for Trading In Gas-Guzzlers
$4 Billion Plan Heads to Senate

By Kendra Marr and V. Dion Haynes
Washington Post Staff Writers
Wednesday, June 10, 2009

Joshua King brought his 1995 Jeep Cherokee to Kip Killmon's Tysons Ford yesterday to have the oil changed in hopes of extending its life a little longer. Low rate financing and other incentives had not persuaded King to buy a new car.

But yesterday he said Congress may have given him a good reason. The House approved a plan to give vouchers of up to $4,500 to consumers who trade in their gas-guzzling clunkers for more fuel-efficient models. And King said he would consider a swap.

"I'd definitely do that," said King, a 28-year-old father of two from Gainesville. Having logged 200,000 miles, his Jeep "now is worth only $1,500."

Under the House plan, trade-ins must be in drivable condition, get no more than 18 miles to the gallon, and be 1984 models or newer. The new car or truck must get better gas mileage; the bigger the difference the bigger the voucher. For instance, a new car getting at least 10 more miles per gallon than the old car would be eligible for a $4,500 voucher.

To ensure that the vehicles being scrapped or recycled are actually being driven before the swap, trade-ins must be insured to the same owner for at least a year.

Dealers, unions and automakers have been lobbying for months for the legislation in hopes that it would spark an otherwise weak auto sales market.

Abbas Khademi, a partner in Marlow Heights Ourisman Chevrolet near Andrews Air Force Base, said the dealership's business has dropped 30 to 40 percent from a year ago, a sharp reversal for what traditionally has been one of the busiest Chevy dealers in the region.

When customers do come in to the massive showroom, many take a wait-and-see attitude and leave without a commitment, Khademi said.

"Customers are apprehensive, sitting on the fence, very timid," he said. "A lot of them come in and then say they want to see what happens to the economy before buying a car."

Khademi hopes the House bill will help overcome that reluctance.

Sixteen other countries have enacted similar so-called cash-for-clunkers programs, and many have reported an uptick in sales as a result.

"I hope it has the same kind of effect it had in Germany," Khademi said. "I support anything that will stimulate car sales at this point."

The vouchers are part of a $4 billion plan that won wide support from Republicans and Democrats, passing 298 to 119 in the House yesterday. President Obama has backed the idea, and its supporters in the Senate hope to win approval on their own version soon.

The Congressional Budget Office estimated the bill, the Consumer Assistance to Recycle and Save (CARS) Act, could boost sales by about 625,000 vehicles.

The bill does more than just spur auto sales, said bill sponsor Rep. Betty Sutton (D-Ohio).

"It will shore up millions of jobs and stimulate local economies," Sutton said on the House floor. "It will improve our environment and reduce our dependence on foreign oil."

Other members were dubious.

Rep. Jeff Flake (R-Ariz.) called it "a clunker of a bill."

"It's defying the laws of economics and saying we can manufacture enough demand to keep the auto industry afloat," he said.

The bill is the latest federal effort to prop up the domestic auto industry. Billions of dollars in government loans have flowed to General Motors, Chrysler, auto-financing arms and suppliers. There's even congressional legislation being drafted to help shuttered dealers.

Action now moves to the Senate. Sen. Debbie Stabenow (D-Mich.) and Sen. Sam Brownback (R-Kan.) have introduced similar legislation.

Environmentalists are pushing for a tougher bill that would cut carbon emissions. And critics argue that people willing to take $4,500 for their current car and immediately buy a new one fit a very narrow profile. Another bill sponsored by Sen. Dianne Feinstein (D-Calif.) has more stringent rules on fuel efficiency and would allow consumers to redeem vouchers for used vehicles.

Staff writer Thomas Heath contributed to this report.

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