U.S. cash for clunkers program to end Monday

The program that gives Americans up to $4,500 US to scrap their old gas guzzlers for new, more fuel-efficient cars will come to an end Monday, the U.S. government announced Thursday.

Since the "cash for clunkers" program began in late July, U.S. car buyers have traded in more than 457,000 vehicles in return for $1.9 billion US in rebates. The U.S. Congress has approved total funding of $3 billion US for the program.

"This program has been a lifeline to the automobile industry, jump-starting a major sector of the economy and putting people back to work," U.S. Transportation Secretary Ray LaHood said late Thursday in a release.

GM, Ford, Honda, Toyota and Chrysler have all announced production increases, citing the U.S. program's impact.

Figures show most consumers have traded in trucks and SUVs and bought passenger cars. The U.S. Transportation Department estimates that the resulting gas mileage improvements with the new vehicles have averaged 60 per cent.
Sales plunge anticipated

Analysts are predicting that vehicle sales in the U.S. will plunge once the program comes to an end. Many say offering cash for clunkers, while popular, merely brought forward sales that would have happened anyway in a matter of weeks or months.

"You may see such a collapse in the U.S. marketplace with the disappearance of the government money that the government may have to come back and put in more money," auto analyst Dennis DesRosiers told CBC News.

Critics also point out that the U.S. program has seen Japanese automakers benefiting the most. Of the top 10 cars consumers have been buying after trading in their clunkers, seven are Japanese models. GM and Chrysler — the two companies taxpayers spent billions rescuing from bankruptcy — have no models among the top 10.

Given the popularity of the U.S. measure, Ottawa is under some pressure to beef up Canada's more modest cash for clunkers rebate.

The current Canadian program — touted as a way to reduce air pollution and greenhouse-gas emissions — offers incentives that include discounts on public transit passes, bicycles, memberships in car-sharing programs or $300 cash. The retired vehicles are turned over to scrap yards to crush and recycle.

The Retire Your Ride program has succeeded in scrapping about 12,000 vehicles since January. The program has an annual target of 50,000 a year. Analysts and the auto industry say the reward needs to be bigger to attract more interest.

Britain and several other European countries have announced cash for clunkers programs of their own. Like the U.S. program, they have proven to be very popular.