By Andrew Ganz
Thursday, Jun 25th, 2009 @ 8:47 am
 
As expected, United States President Barack Obama signed the much-anticipated $1 billion "cash for clunkers" program into law late yesterday. The Transportation Department will have 30 days to set the regulations for the program, which was tacked on to a $106 billion military spending bill.

Now referred to as the "Cash Allowance Rebate System," or CARS, the program is set to take effect July 1, though the government agencies are cautioning that they will need 30 days to hone the system of disposal for traded-in vehicles.

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

The National Automobile Dealers Association is encouraging its members to wait until the rules have been released next month before they participate in the program.

The main rules are not expected to change; so-called "clunkers" must not be more than 25 years old, must average a combined 18 mpg or lower (for most vehicles; large pickups and cargo vans will have separate rules), must be currently registered and must have been owned by their current owners for at least a year. They can be traded in on new, more efficient vehicles for federal rebates between $3,500 and $4,500, depending on the new vehicle.

The government says it will refine its plan to scrap the "clunkers" to ensure they don't wind up on the road again, potentially by removing essential components from the vehicles. It is not expected that the cars will be destroyed; rather, they will likely end up in junkyards.

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