Now that the federal government’s cash for clunkers program is a fading memory, a new car rebate or incentive can make or break a purchase. With a little help from the factory, the qualification factors can tilt in your favor.

The CARS program is set to run until November 30th of this year, or until the funds are exhausted. Congress may or may not renew the program when the allocation runs out.

The Cash for Clunkers rules include eligibility requirements for both the surrendered and new vehicles. Unfortunately, the vast majority of folks will not qualify.

The car, truck, or SUV that’s turned in must meet the following requirements:

• 18 MPG or Less – The vehicle’s combined fuel economy rating must be 18 miles per gallon (MPG) or less.
• Model Year 1984 or Newer – Vehicles older than 1984 are not eligible.
• Continuously Insured and Registered- You must prove that the vehicle has been registered and covered under a liability policy for the past twelve months.
• Driveable – The vehicle must be roadworthy. If it’s not running, it’s not eligible.

The new vehicle must have a cost of $45,000 or less and provide a higher level of fuel efficiency (with the exception of commercial trucks). The value of the credit is based on the amount of the improvement in fuel economy.

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Many of the car manufacturers have Cash for Clunkers calculators on their websites that provide basic qualification for their models. In addition, both Kelly Blue Book and Edmunds have comprehensive Cash for Clunkers calculators.

What’s next … members of Congress appearing on car commercials?

More as this develops …

2009 Cars that Achieve 22 MPG Combined or Higher

The Clean Car Rebate Act of 2009 (H.R.1808) offers a modest sliding scale of rebates for vehicles that have a combined average of 28 miles per gallon (MPG) or more.

That’s all well and good for folks that can get by with a vehicle that fits into those criteria. A compact four passenger car should have no problem averaging 28 MPG.

But what about families that need to transport five or more people safely and comfortably? How many vehicles qualify for the program?

Under this proposal, large families will not receive funds to purchase a fuel-efficient vehicle that fits their needs … because the criteria for qualification is flawed.

One solution might be to fund swaps with a specific vehicle-by-vehicle MPG improvement qualification threshold. For example, a 6 MPG improvement threshold might provide a rebate for folks swapping a Ford Expedition for a Ford Flex.

Take a look at the vehicles that currently qualify for H.R.1808 (as initially proposed) and envision how six people would fit into any one of them. Then, consider how many of these vehicles are built in the United States.

This bill while well-intentioned, needs tweaks …

2009 Cars – 28 MPG or Higher

… we will also find ways to increase car sales while modernizing our auto fleet. Such fleet modernization programs, which provide a generous credit to consumers who turn in old, less fuel-efficient cars and purchase cleaner cars, have been successful in boosting auto sales in a number of European countries. I want to work with Congress to identify parts of the Recovery Act that could be trimmed to fund such a program, and make it retroactive starting immediately.

The Consumer Assistance to Recycle and Save (CARS) Act (H.R.1550) seeks to reward new car buyers with a $3,000 to $5,000 bounty to dump their old gas guzzlers and purchase a more fuel-efficient car or truck.

Opposition to the CARS act has come from sources including the Specialty Equipment Manufacturers Association (SEMA), and a number of foreign auto manufacturers. Nevertheless, with the Obama administration now voicing strong support for the program, the adoption of a federal Cash for Clunkers program seems to be inevitable.

Ready or not America, it’s (almost) time to buy a car.

Yet another (and less generous) proposal surfaced on 3/31.

Introduced by Rep. Jackie Speier and cosponsored by Rep. Mike Thompson, the “Clean Car Rebate Act of 2009″ (H.R.1808) seeks to “amend the Internal Revenue Code of 1986 to provide for consumer rebates for purchases of certain new passenger motor vehicles.” The rebate will initially apply to vehicles purchased in 2009 and 2010, with amounts tied to fuel-efficiency. Requirements will be tightened up incrementally, year to year, with years subsequent to 2010 subject to further increases in fuel economy.

There are plenty of questions that remain to be answered. If this country is to enact a variation of one of these plans, ultimate success may be tied to the ability to use the government rebate as a down payment on the new vehicle.

That’s right … no money down.

That’s right, my fellow Americans. If you own a vehicle that is eight years old or older, you could be eligible for the latest round of free government cheese … providing that you purchase a new car that is rated at 27 miles per gallon (MPG) or higher on the highway or a new truck that is rated at 24 MPG highway or higher.

A similar program was introduced in Germany that has been credited with raising their domestic auto sales in February 2009, over the same month last year. The thought, “if it works in Germany, why not in America?” leads to the obvious question. Why set the MPG limit so low?

The Cash for Clunkers bill, if approved, would be the maraschino cherry on top a growing ice cream sundae of incentives for Americans to buy a new car. Federal tax credits currently include a state tax rebate, as well as rebates on specific alternative fuel vehicles (aka: the hybrid tax credit).

We’ll have additional analysis once we’ve had the opportunity to comb through the bill …

We know that the list of domestic car companies’ offerings will shrink. General Motors will soon shed Hummer, Saturn, and Saab, with Pontiac becoming a niche brand within a brand. While Ford is in the process of shopping Volvo, there’s a better chance that the marquee will stand.

The bigger question perhaps, is which imported car companies will follow the lead of Isuzu (among others) and pull back from American sales? With the contraction in the jumbo luxury SUV market, the inevitable departure of Hummer cannot bode well for Land Rover.

It’s clear that the days of living high on the hog are over. Which car companies not presently in the States will gain a foothold? Cheap cars are the future, but it will take consolidation and creativity to survive. Will we actually see the return of Fiat and Alfa Romeo, through a tie-up with Chrysler, or is it a myth? Could Peugeot slip back in with Mitsubishi, and Renault with Nissan?

With the domestic car companies reluctant to introduce highly fuel efficient clean diesel-powered vehicles, the door has been opened to the world’s automakers – most specifically the Europeans – like never before.

List of Car Companies Presently Selling in the USA:

• Acura
• Aston Martin
• Audi
• Bentley
• BMW
• Buick
• Cadillac
• Chevrolet
• Chrysler
• Dodge
• Ferrari
• Ford
• General Motors
• GMC
• Honda
• Hummer
• Hyundai
• Infiniti
• Isuzu
• Jaguar
• Jeep
• Kia
• Lamborghini
• Land Rover
• Lexus
• Lincoln
• Lotus
• Maserati
• Mazda
• Mercedes-Benz
• Mercury
• Mitsubishi
• Nissan
• Pontiac
• Porsche
• Rolls Royce
• Saab
• Saturn
• Smart
• Subaru
• Suzuki
• Tesla
• Toyota
• Volkswagen
• Volvo

Updated 2/13: The US Senate has moved to sweeten the deals, by tacking on automotive purchase income-tax deductions onto the economic stimulus bill. The auto amendment was adopted with broad support (71-26) in the Senate. While the full stimulus measure has passed both the Senate and the House, there were reductions in the tax break.

The bottom line? Folks who buy a new car in 2009 will be eligible to deduct sales taxes on the purchase. The big if remains …whether funds will be available for those loans and whether prospective buyers will qualify.

To this point, automakers have been offering rebates and 0% financing deals to get people to open up their checkbooks and buy a car. If the House had chosen to follow the Senate’s lead in refunding auto loan interest, it would have given the automakers latitude to end their 0% financing offers, and instead, slash the delivery price (or increase the rebates) of their current inventory.

Unfortunately (for potential car buyers), the House chose to remove the tax-write off for loan interest, dulling the attractiveness of the offer. The bill does remain a valid source of revenue for individual states, through sales tax refunds.

Brave bargain-hunting car buyers are eligible for additional alternative fuel tax incentives on the purchase of a select group of fuel-efficient cars. These alternative fuel tax breaks range from $1,550 through $3,400. The group includes a select number of hybrid- and clean diesel-powered rides. Hybrid tax rebates include the 2010 Ford Fusion Hybrid and Mercury Milan Hybrid, and yes, even the 2009 Cadillac Escalade Hybrid. The popular Toyota Prius however, is not eligible. Clean diesel tax rebates are available for the 2009 Volkswagen Jetta TDI and Mercedes-Benz 320 BlueTECs, among others. You read that right … the United States Government will give you a tax credit for buying a Mercedes-Benz.

Two primary reasons to buy a car in this climate are peace of mind and the reduction of month-to-month expenses. If you’re driving a gas-guzzling clunker that’s in and out of the shop every other week, you just might be a prime candidate to buy a new car. By slashing your gasoline consumption and repair bills, you may be able to justify that monthly payment … with the sales tax paid by Uncle Sam.

While it appears that gas prices have bottomed out and are on the way up, you’ll need real-world data before you head out to buy a car. Do your homework before you hit the road and plug your numbers into the MPGomatic gas mileage calculator to justify that purchase … or not …