The Democrats have proposed an incentive program to help-out potential car buyers and the U.S. auto industry. The only problem is, the gas-for-guzzlers legislation isn’t aimed at boosting car sales in the general sense.

The bill would provide up to $4,500 for people who trade in low mpg cars and trucks, to spend on a more fuel-efficient vehicle. Those who trade in a vehicle that gets less than 18 mpg for one that achieves more than 22mpg would get a $3,500 voucher, while $4,500 would be offered if the new vehicle gets 10 mpg (or more) than the vehicle being traded in.

All the terms of the bill are not yet available and it’s not yet clear if a vehicle would have to be a certain age to quality.

Michigan Democrat John Dingell said that if the bill was passed by Congress and approved by President Obama it could lead to as many as one million new car sales.

“This program will spur consumer demand for new vehicles, thereby injecting much-needed cash into our ailing domestic automakers,” Dingell said, adding that it would also lead to “meaningful reductions in energy use by American drivers.”

That final point does, however, seem to be more of the focus of the cash-for-guzzlers bill, which by both its name and content is aimed at promoting the sale not of vehicles in general but of fuel-efficient vehicles.

Earlier today we reported that the German government’s incentive program continues to be a huge success. That “scrappage” plan has produced near-record car sales in Germany by offering incentives to those who trade in old vehicles for new ones, regardless of where the vehicle is built or how much fuel it consumes.

[Source: Automotive News]

The German government’s incentive plan to get its citizens buying cars continues to be a success with sales of new vehicles up 19 percent over the same period last year.

In total 380,000 units were sold, as people cashed-in on the government’s scrappage plan that provides 2,500 Euros (or roughly $3,200) towards a new vehicle when you send your 9-year-old (or older) car to the scrap yard.

The 19 percent increase follows an even more impressive 40 percent surge in sales in the month of March, bringing the yearly total to it’s highest level since 1999 – the current sales record.

Meanwhile, Germany’s European neighbors suffered losses, with Italian and French car sales down 7.5 and 7 percent respectively, while Spanish car sales plummeted 45.6 percent. Both Italy and France are offering incentives while the Spanish government has so far refused to.

The German government launched its scrappage plan in February and has since increased funding for the project from 1.5 billion Euros to 5 billion Euros, to ensure it can run until the end of ’09.

The Obama administration has repeated that it is looking in to a scrappage plan to boost U.S. auto sales but no plan has yet to be put in place.

[Source: Automotive News]

Photo Courtesy whitehouse.gov

While President Barak Obama’s press conference on what his administration is doing to solve the crisis in the U.S. auto industry focused mostly on helping out General Motors and Chrysler, he did give brief mention of a few initiatives aimed at jump-starting car sales at the consumer level.

Two main programs were discussed, including a scrappage program and tax deductions.

President Obama said that he will be looking into ways to see if there is any money to set aside in a fund to create a scrappage plan. While no specifics were given as to the details of the plan, usually these programs give consumers a significant rebate on the purchase of a new car when they trade in or “scrap” their old car. Often cars must be close to 10 years of age to qualify.

A similar program was launched in Germany several months ago with resounding success, boosting car sales by 21 percent in February over the previous period a year earlier. President Obama said that such a plan in the United States could increase car sales by as much as 100,000 units in 2009.

It is not clear if the scrappage plan would apply to just GM and Chrysler products, or to any vehicle manufactured within the United States, or to any vehicle at all.

The second incentive would allow for tax paid on a new car to be deducted from one’s income tax. This program is further developed as President Obama said his administration has already begun working with the IRS. A specific time frame has also been given that would seen the tax deduction apply to any vehicle purchased between February 16th and December 31st of this year.

The scrappage plan, once it goes into effect, would be retroactive as of today.

Ford Canada is asking the Canadian government to put in place a vehicle scrappage plan like the one currently in effect in Germany.

Ford Canada CEO David Mondragon told a parliamentary committee that Ford isn’t looking for a bailout and instead suggested a plan that would include $350 million ($270 million U.S.) for a scrappage plan. The way the plan would work would be for the government to give cash incentives for people who trade in their old cars and purchase new ones.

Mondragon’s suggested solution would include an incentive value of $3,500 ($2,700 U.S.), for consumers to use against the price of a new car when they traded in their old one. The deal would apply to any car 11-years-old or older.

With 35 percent of cars on Canadian roads over 11-years-old, this could account for as many as 100,000 car sales.

In Germany, the rule applies to cars 9-years-old or older and so far has been a resounding success. While February sales in the U.S. continued to tumble, car sales in Germany for the month were actually up  21 percent over the same period the year before.

[Source: The Globe and Mail]