Auto Dealers Will Control US Auto Clunker Turn-ins

DON'T MISS: Cash For Clunkers Guide - Qualifying Vehicles

WASHINGTON, June 24, 2009; John Crawley writing for Reuters reported that U.S. auto dealers will determine whether consumers receive markdowns on new vehicle purchases under the $1 billion federal "Cash for Clunkers" program President Barack Obama signed into law on Wednesday.

The initiative to help reverse a sharp slide in U.S. auto sales this year will take effect in 30 days under direction of the Transportation Department.

Congress funded the program through Sept. 30.

Proponents hope the measure prompts up to 250,000 vehicle sales, which are running at an annual rate of just under 10 million for 2009.

"It's complex and not like anything we've ever run before," said Rae Tyson, spokesman for the agency's National Highway Traffic Safety Administration. "We're starting from scratch."

Tyson said some details need to be finalized, but key elements are in place for dealers to offer consumers up to $4,500 toward a new, more fuel efficient car when they trade in an older model that gets worse gas mileage.

There is a 25-year age limit on older vehicles and those driven to a dealer for credit must have been owned by the new car buyer for at least a year.

The government is working on a plan to ensure that the trade-in vehicle is not resold.

"Dealers already have mechanisms for disposing of vehicles that they don't want to resell. We're going to require some fullproof means of proving that the vehicle will never be on the road again," Tyson said.

One option may require dealers ensure that the engines or other key components are removed from the older vehicles.

The "clunker" provision was included in a military spending bill signed by Obama.

Editing for Reuters by Leslie Gevirtz