SEPTEMBER 2009

Automotive recyclers seek trade-in rules clarification

The Automotive Recyclers Association (ARA) is calling on the United States Senate to clarify an important consumer provision under the Car Allowance Rebate System (CARS) program that remains widely unanswered. The clarification centers on CARS rule language that centers on auto dealers ability to retain up to $50 of the scrap value of the vehicle for their administrative costs for participation in the program.

Under the rules of the CARS program, automobile dealers are required to give consumers an estimate of the “scrappage value” of their trade-in vehicle. While consumers are not expected to receive trade-in values for their vehicles because of the CARS requirement that will not allow the vehicles back onto the roads, it is likely that automobile dealers will receive funds in excess of $50 from either a salvage pool auction or automotive recycling facility.

What remains unclear, and what the United States Department of Transportation (DOT) did not specifically address in the CARS rule, is whether the consumer is entitled to those additional funds in addition to their $3,500 or $4,500 credit from the government.

Before the Senate passes legislation to provide additional funding for the program, ARA believes the Senate should address this important consumer issue and ensure those funds go to the consumer turning in their clunker vehicle.