U.S. DOT to Implement Car Allowance Rebate System

President Obama has enacted the Consumer Assistance to Recycle and Save Act of 2009, which establishes an incentive program to encourage consumers to trade in older, less fuel efficient cars and trucks for newer, more fuel efficient vehicles. The U.S. Department of Transportation's (DOT) National Highway Traffic Safety Administration (NHTSA) will implement the voluntary Car Allowance Rebate System (CARS) program. Consumers may receive $3,500 or $4,500 toward the purchase or lease of a new vehicle at a participating dealership. The incentive amount depends on the type of vehicle purchased and the improvement in fuel economy of the purchase vehicle as compared to the trade-in vehicle. In general, trade-in vehicles must have a combined city/highway fuel economy rating of 18 miles per gallon (mpg) or less and must be in drivable condition, less than 25 years old, and registered and insured for the full year prior to trade-in. For passenger vehicles, the purchase vehicle must be at least 4 mpg more fuel efficient than the trade-in vehicle. For vans, sport utility vehicles, and pickups, the purchase vehicle must be at least 2 mpg more fuel efficient. NHTSA will publish rules for the program within 30 days of enactment and the program will end November 1, 2009, or when DOT exhausts the funds set aside for the program, whichever comes first.