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US TO END CASH-FOR-CLUNKERS SCHEME
By Bernard Simon in Toronto 2009-08-21
The US cash-for-clunkers car scrappage scheme has become a victim of its own success, with the government announcing on Thursday that the incentives will come to an end on Monday evening, just a month after they were introduced.
The decision was taken to ensure that payments under the scheme do not exceed the $3bn allocated by Congress.
By Thursday, the transportation department had recorded 457,000 transactions, worth $1.9bn in rebates.
Under the scheme, modelled on similar incentives in Europe, buyers who trade in old vehicles for those with lower fuel consumption receive a rebate of either $3,500 or $4,500, depending on the fuel consumption of the replacement vehicle.
Congress initially earmarked $1bn for the incentives, but added another $2bn two weeks ago in response to the initial surge of applications.
The scheme has been widely hailed not only as a significant boost to the embattled North American motor industry, but also as perhaps the most successful element of President Barack Obama's fiscal stimulus measures.
Several carmakers, including General Motors and Ford Motor, have already stepped up production to replenish depleted inventories.
JD Power and Associates, a consultancy, estimates that the incentives will boost US light-vehicle sales to an annual rate of 12.2m units in August, compared with 9.7m in the first six months of the year.
The scheme has triggered an unexpectedly sharp switch in Americans' car-buying habits.
Small cars and crossovers have dominated the vehicles bought under the scheme.
Early this week, the three most popular models were the Toyota Corolla, Honda Civic and Ford Focus, all small sedans.
Meanwhile, all 10 of the most traded-in clunkers so far are sport-utility vehicles, pick-up trucks and minivans. |
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