Legislative/Regulatory Alert
To:
Chief Motor Vehicle Administrators
Chief Law Enforcement Officers
FR:
Neil Schuster, President & CEO
DATE:
June 25, 2009
RE:
Cash for Clunkers Becomes Law
On June 24, 2009, President Obama signed the Iraq and Afghanistan War Supplemental
Appropriations which included the Car Allowance Rebate System (CARS), commonly referred
to as “Cash for Clunkers. The CARS program aims to remove older, less fuel efficient vehicles
from the road and replace them with new, more fuel-efficient vehicles by subsidizing consumers
with federal vouchers.
The administrative functions of the provision fall upon the U.S. Department of Transportation’s
(DOT) The National Highway Traffic Safety Administration (NHTSA), the U.S. Environmental
Protection Agency (EPA), and the automobile dealers that DOT will register as eligible
participants in the program. DOT is appropriated $1,000,000,000 to implement the law.
The program also requires reliance on federal systems to carry out certain aspects of its mandate
– specifically recording vehicle identification number (VIN) of the disposed vehicle and
recording the VIN of all new fuel efficient vehicles purchased or leased. This section of the law
specifically cites coordination with The National Motor Vehicle Title Information System
(NMVTIS) for recording vehicle identification number (VIN) of the disposed vehicle.
While NMVTIS could potentially also serve as the mechanism for NHTSA to maintain a
database of the VINs of the purchased vehicles, this is not specified in the law and has not yet
been determined. AAMVA is engaged in discussions with NHTSA and EPA to determine how
NMVTIS will be used as part of implementing the law.
Under the CARS program, NHTSA is directed to establish a voluntary program that will:
 Authorize the issuance of an electronic voucher to offset the purchase price or lease price
for a qualifying fuel efficient vehicle upon surrender of an eligible trade in vehicle to a
dealer participating in the program.
 Register dealers for participation in the program, requiring all participating dealers to
accept vouchers as partial or down payment on qualifying vehicles, and transfer each
eligible trade-in vehicle to an entity for disposal.
 Make electronic payments to dealers for eligible transactions accepted by registered
dealers
 Establish and provide for enforcement measures to prevent and penalize fraud under the
program
To qualify for a $3,500 value:
 The new vehicle is a passenger vehicle with a fuel economy value that is at least 4 MPG
higher than the combined fuel economy value of the trade-in
 The new vehicle is a category 1 truck and the combined fuel economy value of the truck
is at least 2 miles per gallon higher than the combined fuel economy value of the trade-in
 The new vehicle is a category 2 truck that has a combined fuel economy value of at least
15 MPG and the trade in is a category 2 truck with a combined fuel economy value that is
at least 1 MPG lower than the new vehicle, or
 The new vehicle is a category 2 truck that has a combined fuel economy value of at least
15 MPG and the trade-in vehicle is a category 3 truck of model year 2001 or earlier.
 The new vehicle is a category 3 truck and the trade in vehicle is a category 3 truck of
model year 2001 or earlier and is of similar size of larger than the new vehicle as
determined by the Secretary
To qualify for a $4,500 value:
 The new vehicle is a passenger vehicle with a combined fuel economy value at least 10
MPG higher than that of the trade-in
 The new vehicle is a category 1 truck and the combined fuel economy is at least 5 MPG
higher than that of the trade-in
 The new vehicle is a category 2 truck that has a combined fuel economy value of at least
15 MPG and is 2 MPG higher than that of the category 2 truck trade-in.
Exactly how the program will work will be detailed in the rules which are required to be
promulgated by NHTSA in the next 30 days. The rules will include:
 Means for registering dealers with the program
 Procedures for reimbursement of dealers
 Requirements for dealers to use vouchers in addition to other rebates/discounts
 Requirements for dealers to disclose to the person trading in the vehicle the best estimate
of the scrappage value of the vehicle.
 Requirements for dealers to accept and transfer the amount paid for scrappage up to $60
and allow the dealer to keep any amount more than $60 designating $50 of the excess
payment to pay for administrative costs of the program.
 Clarify that dealers will not be reimbursed for storage costs of trade-ins
 Requirement and procedures for the disposal of eligible trade-in vehicles
 A list of entities dealers may transfer trade-in vehicles for disposal
 Enforcement of penalties
The law as written outlines other basics of the program, including
 Period of eligibility – vouchers can be used between the date of enactment and 1 year
after the date regulations are implemented.
 Number of vouchers per person and per trade-in – One voucher can be used for a single
person, and 1 voucher may be issued for the joint registered owners of a single eligible
trade-in vehicle. There is no combination of vouchers for purchasing a single vehicle.
 Cap on funds for category 3 trucks – no more than 7.5 percent of the total funds for the
program can be used for vouchers for the purchase of category 3 trucks.



Incentives permitted – the availability or use of federal, state or local incentives shall not
limit the value or issuance of a voucher under the program
No additional fees – a dealer may not charge additional fees associated with the voucher
program.
Penalties – Anyone who violates provisions of the Act is liable for a civil penalty of no
more than $15,000 for each violation.
It also outlines requirements of the automobile dealer related to each trade-in vehicle, including
that dealer:
 Will arrange for the vehicle’s title to be transferred to the United States and will accept
possession of the vehicle on behalf of the United States
 Will not sell, lease, exchange, or otherwise dispose of the vehicle
 Will transfer the vehicle (including engine block) and the vehicle title to an entity that
will ensure that the vehicle will be crushed or shredded within DOT regulatory
prescription and that it will not be sold, leased or exchanged for use as an automobile by
that entity. However, nothing precludes a person responsible for the crushing or
shredding from selling any parts of the disposed vehicle other than the engine block and
drive train (unless the transmission, drive shaft, or rear end are sold as separate parts) or
retaining the proceeds from such a sale
 The Secretary (DOT) is responsible for coordinating with the Attorney General to
ensure that the National Motor Vehicle Title Information System and other publicly
accessible systems are appropriately updated on a timely basis to reflect the
crushing or shredding of vehicles under this Act and appropriate re-classification of
the vehicles’ titles. The commercial market shall also have electronic and
commercial access to the vehicle identification numbers of vehicles that have been
disposed of on a timely basis.
Cash for Clunkers Program Eligibility Chart June 19,2009
Eligible Trade In
Vehicle "Clunker"
Car, light truck, or large
light duty truck:
• With combined
(hwy/city average) fuel
economy of 18 mpg or
less, which can be found
by visiting
www.fueleconomy.gov
• Manufactured less than
25 years since the date of
the trade-in.
OR
Category 3 Work Truck
• An 8,500 to 10,000 lb
GVW work truck model
year 200 I or older.
Ownership
Requirements
• Is in drivable condition.
New vehicle
requirements
for $3,500 credit
New Passenger Car: Must
achieve a combined
(highway/city) fuel
economy improvement of
at least 4 mpg (minimum
of 22 mpg) above the
trade-in.
New Light Duty Truck:
Must achieve a combined
(highway/city) fuel
economy improvement of
at least 2 mpg (minimum
of 18 mpg) above the
trade-in.
New Large Light Duty
Truck (6,000-8,500 Ibs
GVW): Must achieve a
combined (highwaylcity)
fuel economy improvement
of at least I mpg
(minimum of 15 mpg)
above the trade-in.
New vehicle
requirements
for $4,500 credit
New Passenger Car:
Must achieve a combined
(highway/city) fuel
economy improvement of
at least 10 mpg (minimum
of22 mpg) above the
trade-in.
New Light Duty Truck:
Must achieve a combined
(highway/city) fuel
economy improvement of
at least 5 mpg (minimum
of 18 mpg) above the
trade-in.
New Large Light Duty
Truck (6,000-8,500 Ibs
GVW): must achieve a
combined (highway/city)
fuel economy improvement
of at least 5 mpg
(minimum of 15 mpg)
above trade-in.
• Continuously insured
consistent with applicable
State law.
AND
• Registered to the same
Owner for a period of not
less than 1 year
immediately prior to such
trade-in.
Effective Dates and
Limitations
Effective July 1,2009 through
November 1,2009*
*The National Highway Traffic
Safety Administration (NHTSA)
must finalize detailed rules and
create an online system for dealers
to complete these transactions.
NHTSA has to complete the final
rule 30 days after the bill becomes
law.
Category 3 Work Trucks
(8,500-10,000 Ibs GVW):
No fuel economy
requirement.
• Dealer must certify
the old vehicle will not
be resold for reuse as
an automobile or truck
in the United States or
any other country.
• Dealer must transfer
the old vehicle to an
entity that will ensure
the vehicle is crushed,
shredded, and not
returned to road use.
No customer income limitations
under this program.
New vehicle must be $45,000
MSRP or less.
• Limit 1 voucher per customer.
No $4,500 work truck
voucher
Scrappage
Requirements
• Not more than 1 voucher may
be issued for the joint registered
owners of a single eligible tradein vehicle.
• Excludes leases less than 60
months.
These are the general
guidelines as written
in the bill. NHTSA
must finalize specific
rules for this process,
which will be sent to
dealers as soon as it
is complete.