The U.S. introduced federal Cash for Clunkers (C4C) program as the U.S. Car Allowance Rebate System (CARS). It offered consumers rebates up to $4,500 to encourage them to buy or lease a more environmentally friendly vehicle for a less fuel-efficient car or truck trade in.
The program was very popular when it started in late July and quickly burned through its $1 billion in funding, and Congress approved an extra $2 billion.

The C4C/ CARS program was intended to:

• Energize the economy
• Boost auto sales
• Put safer, cleaner and  more fuel-efficient vehicles on the nation's roadways

How genuine is CARS in achieving these objectives:

• CARS has failed the genuine environmental initiative: The environmental and economic logic of providing incentives for clunking still with several years of useful life sounds dubious.
• CARS won't help struggling car manufacturers that produce larger, more expensive and often polluting vehicles; the auto industry was primed for a revival over the next two years with or without government help
• CARS was only a transfer of $3 billion from taxpayers to automakers: the government's auto revitalization program gives away up to $4500 for new cars and a handful of car buyers gained
• People are paid thousands of dollars for cars they might have bought later this year anyway
• C4C would not benefit the Big Three: People should not be paid to destroy working capital, This would be costly for the taxpayer and fuels an overproduction of cars, distort competition between sectors and delay the restructuring of the automotive sector
• The program seemed stacked to encourage more SUV purchases
• C4C increases prices: In January cars were at their lowest-ever prices in real terms due to the recession and oversupply. Following C4C scheme and depreciation of the dollar and by the need to recoup some of the costs of $4,500 grant car prices have increased
  • Political economy: Most of the purchases would have been made in the near future anyway. It may also exacerbate oversupply problems in the sector
  • C4C required the old vehicles be destroyed: It prevented the recycling of their parts. It takes energy to produce new car parts and new cars
  
• C4C led to a shortage of used cars: CARS shifted activity from the used-car sector to new cars. In order to take advantage of the temporary scheme there were more new-car buyers
  
• C4C will inflate used car prices sooner or later: Future used car sales may be lower when the scheme ends. People may also be trading in lower-quality second cars that they did not drive much
• CARS hurt non-auto consumption, which fell 0.6%
• C4C is bad for used car dealerships and charities: Volunteers of America and other charities receive tens of thousands of cars each year. These donations have fallen up to 12 percent  and a 25 percent drop is feared as owners rush to trade gas guzzlers for new fuel-efficient models
• C4C hurt the lower-income people who would normally buy serviceable used cars worth less than $4500. The government is outbidding them for these affordable vehicles and then destroying them. This would further increase the prices of the used cars available in the market
• CARS hurt the workers and businesses that make a living through older cars and trucks. These businesses get counted in gross domestic product

Criteria for qualifying for the giveaway were so lenient that the environmental benefits were minimal.

• The government must implement minimum vehicle efficiency standards
• Targeting the worst polluting cars leads to the largest environmental gain: Based on fuel consumption, gallons per hundred miles (GPHM), a Toyota Prius at 2.17 GPHM, a RAV4 at 4.17 GPHM and a Range Rover at 7.14. GPHM
• The program requires buyers to update to a more efficient vehicle, it is much easier to qualify for a rebate if you are buying an SUV
• A small miles-per-gallon upgrade gas guzzling SUVs will make a bigger net difference in emissions than a medium-sized MPG upgrade improvement among cars that are already fuel efficient

CARS/C4C has precedence in the U.K. and Germany: In the U.K. scheme, government and manufacturers offer 1,000 pounds each toward the cost of a new car or van if owners trade in a vehicle more than 10 years old that they have owned for at least a year

The Cash for Clunkers (C4C) program was very popular when it started in late July and quickly burned through its $1 billion in funding, and Congress approved an extra $2 billion. On Thursday, the U.S. Department of Transportation said it had recorded more than 457,000 dealer transactions worth $1.9 billion in rebates and that there was enough money for the program to continue through Monday. Monday was the deadline for the federal ‘cash for clunkers’ program which gives up to $4,500 in rebates to buyers trading in gas guzzlers for more fuel-efficient cars or trucks.
With $3,500 and $4,500 rebates, the program has given an undeniable boost to some automakers. Toyota, General Motors, and Ford Motor have benefited the most, receiving 18.9%, 17.6% and 15.4%, respectively, of total sales under the program.
The most popular trade-ins include the Ford Explorer, Jeep Grand Cherokee, Dodge Caravan and Chevrolet Blazer.

Guidelines for Clunking:

• Any vehicle with production fewer than 500 units per year
• High average of adding the five-year costs of fuel, repairs and maintenance for model-year 2009 vehicles
• A 2009 model of early last year is considered
• A vehicle must have been registered and insured continuously for a full year preceding the trade-in

The unusually high repair and maintenance costs of foreign cars turn them burdensome to own. Some foreign cars involve highest out-of-pocket costs of any models this year. Expensive cars depreciate at faster and proportionately greater rate, like the Audi R8 and BMW M6.

Expensive repairs and maintenance costs make the following vehicles Clunkers:

• Mercedes-Benz: It has high-end AMG line engine often thirsty for more fuel, repairs and maintenance than on any other vehicle; the $88,350 Mercedes-Benz ML63 AMG SUV, sucks up $2,900 in fuel per year and requires an average of $1,641 in repairs after five years
• The $199,700 Mercedes-Benz CL65 AMG coupe follows suite
• BMW M5 sedan requires an average of $5,700 for repairs and maintenance over five years
• Mercedes-Benz SL Roadster and E63 AMG Wagon need maintenance and repairs worth more than $6,000
• Honda’s $23,550 Civic sedan requires $2,700 worth of repairs and maintenance for five years
• Large trucks and SUVs have heavy gas-guzzling habits and tech-heavy systems that require more maintenance
• The Dodge Ram 3500 needs $18,000 worth of fuel and $3,600 for maintenance over five years
• Jeep's Cherokee SRT8 and Ford's F-350 and F-450 pickup truck are also expensive to own and maintain

General Motors acquired Saab under the impression that prestigious European brands would do lots of good to its business. Chrysler bought Lamborghini and Ford the Jaguar, Land Rover, Volvo, and the Aston Martin. GM satisfied itself with Saab. Saturn, Hummer and Saab were put up for sale by GM before it filed for Chapter 11 bankruptcy. Many a company and an investor group from all over the world vied to acquire Swedish brand, and Koenigsegg figured itself in the list of finalists, last month.

Koenigsegg is Buying Saab

Koenigsegg, the manufacturers of ultra high-performance exotic super cars and a group of Norwegian investors signed a letter of intent with Saab to take over the brand from General Motor. The European Investment Bank (EIB) joins them with a finance of $600 millions.

As part of the agreement, Koenigsegg and the EIB will get the control of

• Saab with brand value that has not generated profit in a decade
• Its upcoming product lineup of  new 9-5, 9-3, of a rumored crossover

Koenigsegg super cars can top 400 km/h (240 mph) and they have rank in Forbes magazine’s list of the world’s 10 most beautiful cars. Koenigsegg is backed by Norwegian investors.

Saab will continue to maintain its presence in the U.S and the customer service issues will be fully addressed even during corporate transitions ensuring future purchases by keeping current owners happy. The preliminary deal was now with the U.S. Treasury Department.
The Chinese Are Buying Hummer

GM has agreed to sell its Hummer SUVs and trucks to the Sichuan Tengzhong Heavy Industrial Machinery Company Ltd., It is a western Chinese machinery company that makes cement mixers and now wants to make cars.

The deal would be around $500 million. Hummer was a company that rose to prominence in the early years of the Iraq war for road combat. People bought Hummers because they saw a bit of themselves in it: confidence, self-assuredness and entrepreneurship. So does China now.

Bloomfield Hills-based Penske Automotive Group is buying Saturn

A new deal between General Motor Corp and Bloomfield Hills based Penske Automotive Group (PAG) would save more than 350 dealerships and 13,000 jobs at Saturn in the United States.

The terms in the memorandum of understanding for the sale of Saturn

• Penske would obtain the rights to the brand and certain other Saturn assets
• GM would be contracted to production of the Saturn Aura, Vue and Outlook until the middle of 2011
• Include sale of Saturn distribution network
• Do not include any of GM’s surplus manufacturing assets

Saturn began selling cars in 1990 and has sold more than 4 million vehicles. More than 80 percent of those vehicles are still in operation, according to statistics.

The transaction closes in the third quarter of this year. It is subject to customary closing conditions and regulatory approvals. Financial terms of the agreement are not disclosed yet.

Chrysler is expected to terminate more than 1,000 of its 3,100 dealer agreements. Some estimates put the job loss at around 200,000. The GM cutbacks will not be as immediate as those by Chrysler but the affected GM dealers will not have sales and service agreements renewed after the fourth quarter of 2010.

Do these closers affect the price of a new GM/Chrysler, Dodge or Jeep?

• There can be a panic sale for buyers to get into shopping frenzy of unprecedented deals on GM/Chrysler new cars or trucks
• The fire sales are aimed at dealers closing and eliminating the units in their yards as basements deals
• GM/Chrysler stores with ongoing business may suffer losses on deals in fire sales
• The June deadline might enhance new Chryslers, Dodges and Jeeps sales in the yards of closing dealerships
• If they do not sell the Chryslers, Dodges and Jeeps the closing dealerships lose thousands of dollars on them

People will go out of their way to buy a vehicle from a GM/Chrysler dealer going out of business. Any convenient dealer can attend on their service or warranty claims, thereafter.

Fire sales by the GM/Chrysler dealers usher in good news for buyers and bad news for the dealers:

• Dealers had borrowed money to buy their inventories.
• Whether in business or not they must repay
• They cannot return vehicles
• In light of the GM/Chrysler sales plummeting over as long period most of the closing dealers are heavily saddled with large amounts of inventory
• Vehicles sold at cost price are no solace with the interest payments looming large

What causes the buying frenzy?

• Chrysler shut production  and only the dealers have large inventory
• People rush to buy early or for last minute super bargains before the final closure
• Competitors hog on new car deals by the closing Chrysler dealers
• Surviving Chrysler dealers cashing in on the extinct dealer’s inventories at throw away prices

There was a rebate incentive of $4,000.00 cash back on the 2009 Chrysler 300C till 06/01/2009.