by Joe Wilhelm Jr.
Staff Writer
Another tool to help stimulate the U.S. economy has some excited and others tentatively waiting to see the fine print.
While auto dealerships across America have been qualifying customers and accepting vehicles to be used in a program the National Highway Traffic Safety Administration (NHTSA) calls the “Car Allowance Rebate System (CARS)” since July 1, the program will officially be rolled out Friday. Thirty days after President Barrack Obama signed off on the $1 billion program, the NHTSA is preparing to release the guidelines for how the program will be processed, who will handle the salvage of the vehicles and what agency will be charged with watching out for cases of fraud within the program.
“The National Highway Traffic Safety Administration has had 30 days to determine and publish final eligibility rules to register the car dealers who want to participate in the program and to get the electronic payment system up and running,” said Karen Aldana, spokesperson for the NHTSA. “The program will officially launch July 24 and we will be able to answer all the questions about salvage and how the program is going to work at that time.”
Customers and dealerships alike have been left in the dark about how the program will run, but both have been provided information through government documents and the program Web site, cars.gov, to find out how to participate. The program will run from July 1 until Nov. 1 or whenever the funds run out, which ever comes first.
The site informs people that a vehicle can qualify for the program if it is less than 25 years old on the trade in date, it must get, generally, 18 or less miles per gallon and must be registered and insured continuously for the full year proceeding the trade-in. The amount of incentive someone can receive depends on the upgrade in mpg. A new passenger car purchased with the incentive must get at least 22 mpg and if this rating improves the buyer’s mpg by four miles per gallon they are eligible for a $3,500 voucher and a 10 mpg increase earns them a $4,500 voucher.
For a light duty truck, minimum mpg for a new purchase is 18 mpg. A two mpg improvement earns the $3,500 voucher and a five mpg increase earns $4,500. There are also guidelines for large trucks and work trucks.
Cars.gov provides a tool to determine a trade-in’s mpg value.
The incentive program can be used to purchase or lease a new vehicle, but the lease period must be at least five years. Participating dealers will apply the program funds at the time of the trade-in, so customers are not required to fill out documentation to receive the funds.
“(CARS) has people asking questions,” said David Hamm, president of Jerry Hamm Chevrolet. “It will be interesting to see how many people qualify for the program. We will be able to file applications on Friday, the government will begin the electronic funds transfer process on Monday and we will be able to start releasing transactions on Monday.”
Some dealers have already started advertising that they are certified through the program, and the NHTSA is responsible for compiling a list of participating dealers and displaying them on cars.gov.
The money is available to car buyers nationwide, so one salesman warned that if you are considering the program you shouldn’t wait.
“We have taken a lot of deposits already,” said Leo Linkov, sale manager with Coggin Scion. “There is one billion dollars available through the program and once it is gone, it’s gone. It’s going to go quick.”
One part of the program that might not move so quickly could be the salvage of the vehicles. Trade-ins must be crushed or shredded to ensure that they won’t be returned to the road and dealerships must provide the government with documentation verifying the vehicles have been properly disposed of. The business crushing or shredding the vehicles will be allowed to sell some of the parts of the vehicle before destroying it, but these parts cannot include the engine or drive train.
Dealers haven’t been informed how the government plans to handle the salvage aspect of the program.
“Customers and dealerships are on the same level as far as how information is released regarding the program,” said Hamm. “We are worrying about who will be held responsible for making sure that vehicle has been destroyed. If we get a certificate saying the car has been destroyed and it shows up on the road somewhere, who is the government going to hold accountable? We’ll just have to see when they release more information.”
Another business is in wait-and-see mode as well.
Fortune 300 company Commercial Metals Co., or CMC, has a recycling center on North Lane Avenue in Jacksonville and its shredder can handle about 1,000 cars a day, said Mike Creel, regional manager for CMC.
“We are just waiting on the final word from the government to see how they are going to proceed,” said Creel.
His company would be able to prepare the vehicles for the shredder by removing mercury switches, batteries and fluids from them before they are sent off to the shredder.
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