Automotive | All About Automotive

Chrysler Group is offering consumers $4,500 on most of its 2009 models, doubling the cash-for-guzzlers incentive offered by the federal government.

"Double Ca$h for Your Old Car," offers up to $4,500 cash or 0 percent financing for 72 months on qualifying new vehicles, even if the consumer's trade-in doesn't qualify for the federal incentive.

The program starts tomorrow and runs through August, Chrysler announced this morning.

"We didn't want consumers without qualifying vehicles to feel left out, so we are offering up to $4,500 to everyone," said Steven Beahm, Chrysler's vice president for sales operations.

Chrysler emerged from six weeks of Chapter 11 reorganization on June 10, and now is controlled by Italian automaker Fiat S.p.A. Through the first half of the year, Chrysler's U.S. sales plummeted 45.7 percent to 471,197 vehicles.

The cash-for-guzzlers legislation, designed to help lift U.S. light-vehicle sales from 27-year lows, provides vouchers of $3,500 to $4,500 to consumers who trade in their rides for new vehicles that are more fuel-efficient. Congress allocated $1 billion to fund the program, which expires Nov. 1.

New cars eligible for the federal incentive must have combined highway and city fuel economy of at least 22 mpg, and small light trucks must have combined fuel economy of at least 18 mpg. New vehicles must have a suggested retail price of $45,000 or less.

Trade-ins eligible for "cash for guzzlers" must be drivable, less than 25 years old and have combined fuel economy of 18 mpg or less. They must have been continuously insured and registered to their owners for at least one year.

Vehicles not included in Chrysler's offer are the Jeep Wrangler, Dodge Challenger and Sprinter and all SRT products.

Chrysler had told dealers that its current incentives would last through July. But some dealers had said they believed customers were holding out in hopes of getting more money for their old vehicles under the cash for guzzlers program.

Said Kathy Graham, Chrysler spokeswoman: "We were hearing from a lot of people who thought they could buy with cash-for-clunkers. But then realized for one reason or another their car didn't qualify. We looked at putting an incentive package together that appealed to everybody."

The National Highway Traffic Safety Administration is drawing up rules for the cash-for-guzzlers program and is scheduled to release them by the end of the week.

The Hyundai USA automaker was the first to honor the government-sanctioned program, resulting in 7 percent of its sales.

Fountain Valley-based Hyundai USA became the first company to implement the government’s Car Allowance Rebate System (CARS) incentives on July 2. The program – also known as "cash for clunkers" – accounted for 7 percent of Hyundai’s sales in the first week of its launch.

The National Highway Traffic Safety Administration (NHTSA), signed into law by President Obama, is a federal program that offers additional incentives to buyers opting to trade in a less fuel-efficient vehicle in order to purchase a new, more fuel-efficient vehicle.

Hyundai's rollout enables buyers to receive the full rebate allocated under CARS when an eligible trade-in is exchanged for a qualifying model at a participating Hyundai dealership.

The fuel-efficient Hyundai Elantra was the most popular model purchased under the CARS program, making up 41 percent of sales. Elantra recently earned top honors in the 2009 J.D. Power and Associates Initial Quality Study for the highest initial quality in the compact car segment, and is a "Top Pick" from Consumer Reports.

Recognizing the troubles that have befallen the U.S. automobile industry, our Congress has instituted two pieces of legislation to stimulate new car sales.

That, plus the fact that many dealerships are closing, translates into a potential bonanza for those consumers who are considering a new car purchase.

The first goody is a tax break for consumers who purchase a new car this year because these purchasers can deduct all state taxes and excise taxes paid. The deduction phases out for vehicles that cost more than $49,500, but the tax break does apply to light trucks, motor homes and motorcycles.

However, the deduction does not apply to used car purchases, and it phases out for single taxpayers who have Adjusted Gross Incomes between $125,000 and $135,000. For married couples filing jointly, the phase-out corridor is between $250,000 and $260,000.

Another plus with this program is that the deduction can be claimed on 2009 tax returns regardless of whether one itemizes or claims the standard deduction.

In addition to the new tax breaks, it's a particularly good time to shop for a new car - especially at General Motors dealerships that are closing.

The other piece of legislation pertaining to the automobile industry is the so-called "cash for clunkers" program. The problem with this enactment is that not many vehicles qualify for a government voucher, but if your car is older and not worth much, this program is for you.

Here is how the program works: If you have a car that was manufactured in 1984 or later, has been in use for at least one year, is drivable and the vehicle gets less than 18 mpg, combined for city and highway driving (each vehicle's official mpg rating can be obtained on www.fueleconomy.gov), you will get a voucher worth $3,500 - if the new vehicle's mileage is rated at least 22 mpg. If your new car gets 10 mpg more than your old vehicle, then the voucher is worth $4,500.

For light-duty SUVs, vans and pickups to qualify for a $3,500 voucher, the mileage on the new vehicle must be 18 mpg combined and 2 mpg better than the old one. If the new vehicle gets 5 mpg better mileage, you can claim the $4,500 voucher. For heavy-duty vehicles - those rated at 6,000 to 8,500 pounds for gross vehicle weight - the rules are even more lenient. The $3,500 voucher is available if the new vehicle gets at least 15 mpg combined and just 1 mpg better mileage than the old one. You need only 2 mpg better to qualify for the $4,500 voucher.

Work trucks with gross vehicle weight ratings of 8,500 to 10,000 pounds qualify for the $3,500 voucher so long as the old vehicle is a 2001 or earlier model.

The program is not as good as it sounds, unless your vehicle is a real clunker. The voucher replaces your trade-in value, and your old vehicle heads for the scrap heap.

You can check out www.kbb.com to see if your car's mileage and value make this program worthwhile for you.

+ 'Cash for Clunkers' Calculator by kbb.com

Tax tip: If you are a principal in a C Corporation (one that pays taxes as a separate entity), your corporation can purchase long-term care insurance for you and your spouse, deduct the cost as a business expense, and neither you nor your spouse will incur any income tax liability. Moreover, the dollars from the policies used for pay for qualifying expenses are income tax-free to you or your spouse. And the best part is that you don't have to include any of your other employees.

Kelley Blue Book Provides Key Details for Federal Cash for Clunkers Program, Finding Best Next Car.

Kelley Blue Book, www.kbb.com, the leading provider of new-car and used-car information, today announces the launch of its Cash for Clunkers Calculator on its top-rated Web site, kbb.com. Using the Cash for Clunkers Calculator, consumers can gain important details to assist them in determining if their current vehicle might be eligible for up to $4,500 toward the purchase of a more fuel-efficient new car, research new-car options, and reach a dealer -- all in one place.

Kbb.com provides a simple, interactive Cash for Clunkers Calculator to help consumers determine whether they may be eligible for a credit under the Car Allowance Rebate System (CARS), the official government name of the Cash for Clunkers program.

The calculator helps consumers evaluate vehicles with model years between 1989 and 2009 based on make, model, condition, and mileage. The age of the vehicle, its fuel economy and the fuel efficiency rating of the new car are key factors to determine whether the vehicle qualifies for a 'Cash for Clunkers' credit toward the purchase of a new vehicle.

The calculator also displays the Kelley Blue Book(R) Trade-In Value, to help consumers determine whether their vehicle is worth more or less than the possible credit they could receive from the CARS program.

Under this groundbreaking, government-sponsored program, a consumer can receive instant credit toward the purchase of a new, more fuel-efficient vehicle upon trade-in of an old, gas-guzzling ride that has a combined city/highway fuel economy of 18 miles-per-gallon or less, is in drivable condition and has been insured and registered for the past year by the same owner.

"While the conditions of the new Cash for Clunkers program can be confusing, kbb.com provides a means of assisting consumers to determine eligibility and help get them into their next new car quickly and easily," said Jack R. Nerad, executive editorial director and executive market analyst for Kelley Blue Book's kbb.com.

Ford will be the official sponsor of the Cash for Clunkers program on Kelley Blue Book's kbb.com. Ford has been on the forefront of this new federal program and is dedicated to providing consumers the information they need.

Ford also recently launched its 'Let Ford Recycle Your Ride' campaign to help take the confusion out of the Cash for Clunkers program. With an impressive line-up of fuel-efficient cars, trucks and utility vehicles, Ford can offer a variety of gas-sipping models to fit the needs of any consumer.

"Kelley Blue Book is pleased to have Ford as the official sponsor of the Cash for Clunkers Calculator on kbb.com," said Justin Yaros, executive vice president of product design and development for Kelley Blue Book's kbb.com. "Together, we have the ability to further educate the consumer on the new government program and assist in all stages of the shopping process."

The CARS programs runs through November 1, 2009, or until government funds are exhausted. For more information about the Cash for Clunkers program, visit www.kbb.com/cashforclunkers to view program details, articles and a detailed video.