States Offering Cash for Clunkers

Posted: Jul 01, 2008 11:13 a.m.

What would it take to get you out of that 1992 Explorer? Canada will gladly trade you a bike for it. California might give you $1,500. Texas might offer up to $3,500.

The Detroit News reports, "Some U.S. states and Canada are boosting efforts to get older, dirtier cars off the roads." Texas has begun a new, $45 million "Drive a Clean Machine" initiative "that offers up to $3,500 toward a new vehicle for consumers in Austin, Houston and the Dallas-Fort Worth area who make lower incomes and own a vehicle at least 10 years old." A similar California initiative "spends $50 million a year to give lower-income residents up to $1,500 to retire vehicles that fail emissions tests or $500 to have them repaired. It has no income requirements."

A Canadian program, we reported last month, offers consumers cash incentives, transit discounts and even free bikes in order to scrap older cars.

Why are governments motivated to get old clunkers off the road? To Reduce pollution. According to Kicking Tires, experts estimate that "if you replaced 5 percent of all cars each year it would take 20 years for all vehicles on the road today to be replaced with more fuel-efficient hybrid, diesel, electric, or hydrogen fuel-cell vehicles."

Older cars are a significant problem. "Industry estimates are that 50 percent of all vehicles on the road are more than 10 years old, but a significant 30 percent are 15 years old or older, and 13 percent are 20 years old or older, ages that suggest the vehicles are low-mileage/high-emission machines."

But an economic downturn, combined with record high gas prices, has produced a market where few people can afford to trade in older cars for newer technologies. That trend is only going to get worse over the next several years. New fuel economy rules set to take effect soon are expected to drive up the cost of the average new car. The weak dollar has hurt foreign automakers, forcing most of them to raise prices to compensate. The price of steel, aluminum, plastic and most of the other materials used to make cars is also on the rise, and automakers are expected to pass those costs on to new car buyers.

Research the most affordable small cars with U.S. News' car rankings and reviews.

Check out our cash for clunkers page for details.