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House Energy and Commerce Committee Accepts Cash for Clunkers Program

While numerous aftermarket associations have expressed their opposition for the bill, the National Automobile Dealers Association said it applauds legislators for moving the bill forward.

The U.S. House of Representatives Committee on Energy and Commerce has accepted the "Cash for Clunkers" fleet modernization amendment into the language of House Bill 2454, the American Clean Energy and Security Act of 2009, by a vote of 50-4. The amendment’s goal is to replace older, less-fuel-efficient vehicles with new, more-fuel-efficient vehicles – thus spurring new car sales in the United States.
 
This new provision states that consumers may receive vouchers worth up to $4,500 to help pay for new, more-fuel-efficient cars with a goal of selling 1 million cars in one year. Specifically, the text states:
 • The old vehicle must get less than 18 miles per gallon (mpg).
 • New passenger cars with mileage of at least 22 mpg are eligible for vouchers.
 • If the mileage of the new car is at least 4 mpg higher than the old vehicle, the voucher will be worth $3,500.
 • If the mileage of the new car is at least 10 mpg higher than the old vehicle, the voucher will be worth $4,500.
 
The Automotive Service Association (ASA) noted that a repair option was excluded from the language of the bill. ASA said it supports a "Cash for Clunkers" program with a repair option, specifically with these key points:
 • Includes a vehicle repair option for consumers.
 • Programs should be administered by the states.
 • Vehicle participation should be tied to emissions and improving air quality.
 • Repair cost allowances should be sufficient to address emissions repairs.

The amendment that was accepted by the Committee excludes a vehicle repair option, which could be devastating to independent repairers, according to Bob Redding Jr., ASA’s Washington, D.C., representative.

“Arbitrarily removing older vehicles from America’s highways would take vehicles out of independent repair bays, costing jobs and potentially closing small businesses," said Redding. "A repair option tied to higher-emitting vehicles is the most cost-efficient, consumer-friendly approach to a fleet modernization program. This option will also allow low-income vehicle owners who don’t have the resources for a new vehicle to now have a dependable, lower emission vehicle. This legislation has a long way to go and hopefully will improve as it moves forward.”

One opponent of the bill is the Automotive Aftermarket Industry Association (AAIA), which says that “Cash for Clunkers” would increase pollution and overload landfills.

“‘Cash for Clunkers’ is touted as protecting the environment by taking older vehicles off the road and replacing them with new, more fuel efficient vehicles. The reality is that these scrapped vehicles will be heading to landfills. It’s ironic that a proposal designed to reduce pollution will actually further damage the environment,” said Aaron Lowe, vice president of government affairs for AAIA. “While the true intention of this legislation is not to protect the environment but to financially stimulate the automobile industry in the short term, the hidden costs of this bill could cause environmental havoc indefinitely.”

The “Cash for Clunkers” amendment, included as part of the American Clean Energy and Security Act of 2009 (HR 2454), states that, “For each eligible trade-in vehicle, the title of which is transferred to a dealer under the Program, the dealer shall certify to the Secretary, in such a manner as the Secretary shall prescribe by rule, that the vehicle, including the engine and drive train – i) will be crushed or shredded within such period and in such manner as the Secretary prescribes, or will be transferred to an entity that will ensure that the vehicle will be crushed or shredded within such period and in such manner as the Secretary prescribes; and ii) has not been, and will not be, sold, leased, exchanged or otherwise disposed of for use as an automobile in the United States or in any other country, or has been or will be transferred, in such a manner as the Secretary prescribes, to an entity that will ensure that the vehicle has not been, and will not be, sold, leased, exchanged or otherwise disposed of for use as an automobile in the United States or in any other country.”

“Cash for Clunkers is loaded with so many potholes that the American people will be paying a steep bill both economically and environmentally for a long time,” continued Lowe. “In addition to the wasteful nature of destroying perfectly good vehicles, a tremendous amount of energy and resources will be exhausted to build new vehicles to replace the scrapped ones. Providing incentives for motorists to have their current vehicles maintained for fuel efficiency would be a much better use of federal money that would truly benefit the environment.”

The Engine Repower Council (ERC) also issued a statement this week in opposition of the “Cash for Clunkers” program. These programs are of concern to the vehicle aftermarket since vehicles are scrapped that could be more cost-effectively repaired, increasing the country's carbon footprint and reducing the availability of parts for rebuilders, according to the ERC.

"Many states have attempted to implement this type of vehicle retirement program in the past, but have abandoned the effort because they simply don't work," said Steve Rich, chairman of the Engine Repower Council. "While the programs have a certain appeal to politicians and are sold on the fact that they will get older vehicles off the road, the fact is that these programs reduce the availability of affordable transportation for drivers who, by taking such steps as engine repowering, can keep a vehicle in safe, efficient working order rather taking on the expense of a new vehicle."

One automotive association in support of the bill is the National Automobile Dealers Association (NADA), which said it applauds the progress being made with the legislation.

"NADA congratulates Rep. Sutton and the House Energy and Commerce Committee on their success in advancing a ‘Cash for Clunkers’ amendment on the climate change bill. A successful fleet modernization program will provide significant economic and environmental benefits to the nation," said David Regan, NADA vice president for legislative affairs. "NADA will now work with both House and Senate leadership to refine the program in order to maximize consumer demand and stimulate new vehicle sales. A ‘Cash for Clunkers’ program gets gas-guzzlers off the road and replaces them with more fuel economical vehicles. This will help boost auto sales which, in turn, will help revive the overall economy."