The federal government's "Cash for Clunkers" initiative encouraged people to trade their old automobiles for newer, more fuel-efficient models. Read more about it!

Using financial incentives, the American Government’s Cash for Clunkers program encouraged car owners to trade in outdated, inefficient vehicles and purchase more fuel-efficient models. The program's main goal was to stimulate the economy during the Great Recession by giving people financial incentives to buy new cars. This would increase the number of people buying cars, increasing car sales. Similarly, carbon emissions would be decreased by replacing old, inefficient vehicles with newer, more fuel-efficient models. 

According to previous research, President Obama signed the Automobile Allowance Rebate System (CARS) into law in June 2009 with bipartisan backing in Congress. The National Highway Traffic Safety Administration was in charge of enforcing the law (NHTSA). Auto dealers provided the NHTSA with the necessary data on behalf of qualifying new car buyers. The Vehicle Allowance Rebate Scheme was the official name of the program (CARS). Depending on the vehicle bought, the CARS program offered those who qualified a credit of up to $4,500.

Criteria for Cash for Clunkers

The initiative started in July 2009. A used car that was traded in is required to fulfill the following requirements to get eligibility for Cash for Clunkers:

The trade-in vehicle had to be dismantled, the engine rendered useless, and the body shredded or crushed. The new car must also have an EPA-rated fuel efficiency of at least 22 miles per gallon. On August 24, 2009, the program was over.

There were more complicated regulations for trucks:

The following characteristics were present in light- and standard-duty type trucks, such as SUVs, vans, and pickup trucks:

For heavy-duty trucks:

Pros and Cons of Cash for Clunkers

Will the Cash for Clunkers program be renewed?

A similar concept to Cash for Clunkers has been discussed during the Biden administration and would be a component of Biden's wider infrastructure plan. According to Senator Charles Schumer, the proposal may devote billions of dollars to a program encouraging Americans to move from gasoline-powered to electric automobiles. Most likely, batteries would replace engines in the program.

Final words

The American government offers financial incentives to encourage car owners to turn in their old, inefficient vehicles and buy more fuel-efficient ones. Besides the fact that the program reduced carbon emissions, a Brookings Institution study indicates that there are more affordable ways to do so. Crushing or shredding of the traded-in car was mandated per program rules. Hazardous waste has been discovered in the scrap metal from metal shredders.