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U.S. offers advance peek at 'cash for guzzlers' rules

Fri, 24 Jul 2009

Dealers participating in the "cash for guzzlers" program must visit to find a list of facilities that may qualify for scrapping vehicles and then make sure the company can crush or shred trade-ins, according to preliminary rules on the Web site.

The government posted the rules today for the program, designed to lift U.S. light-vehicle sales from 27-year lows. "Cash for guzzlers" gives consumers vouchers of up to $4,500 for trading in some gas-guzzling vehicles for new ones with better fuel economy.

The list of companies that may qualify for disposing of trade-ins is under the "Disposal and Salvage" link on the Web site, under the bullet point labeled "ELVS List by State." Not all of those disposal firms can crush or shred cars, the federal rules say, so dealers must ask whether they can do so. The facilities can use a mobile crusher, the rules say.

The list may change as disposal companies join or leave the End of Life Vehicle Solutions group used as a source for the Web site, the rules say. So dealers must check the list on the site when they take each trade-in to be scrapped.

In addition, before trade-ins are crushed, dealerships must disable their engines. The procedure for doing so is on page 127 of the rules.

When they receive the trade-ins, disposal facilities must certify they will follow the program's rules for safely disposing mercury switches and other pollutants in the vehicles. The paperwork for doing so is at the "Disposal and Salvage" link at and on page 130 of the rules.

Instead of sending the vehicle directly to a disposal facility, dealerships may also transfer trade-ins to a salvage auction. The salvage auction must fill out similar paperwork certifying that it will follow the regulations for scrapping the vehicles by taking trade-ins directly to a qualifying scrappage company. Those forms are also available at and on page 133 of the rules.

Dealers must send completed disposal facility or salvage auction paperwork to within seven days of getting it signed, the rules say.

Companies that crush the trade-ins cannot transfer them to another disposal facility, including a shredder, according to the rules.

List of dealers

Consumers wanting to get the government vouchers can find a list of registered dealers at, the rules say. Participating dealers must be on a list of franchised dealers, which the government obtained from automakers and will update weekly to reflect new and discontinued franchise agreements.

Those dealers have received letters instructing them on how to register for the program, the rules say, adding that dealers must sign up separately for each brand they sell. The letters included information for registering electronically, and dealers will receive e-mail confirmation after doing so. Their names should appear on the Web site within two to four days, the government estimates in the rules.

Getting reimbursed

To get reimbursed for the consumer's voucher, dealers must first submit applications electronically, using the username and password they receive via e-mail after registering for the program. Page 128 of the rules shows a sample application page that dealers can reference to prepare the necessary information about trade-ins, new vehicles and purchasers.

The government will use the information about the buyers to confirm they have not already received vouchers for a different purchase.

Each dealer must attach electronic copies of the purchase contract or lease agreement, the manufacturer's certificate of origin, certification paperwork from the salvage auction or disposal company and a "summary of sale/lease and certifications form" signed by the dealer and the buyer (page 122 in the rules). The government also "requests" that the dealership attach a customer survey (page 129 in the rules), the rules say.

If an application shows the dealer has met the cash-for-guzzlers requirements, the government will reimburse the dealership for the voucher amount by electronic transfer to an account the dealer lists upon registering for the program.

If the application is incomplete or shows that the dealer or vehicles did not meet the requirements, the government will electronically notify the dealer of the reason for rejection. Dealerships may correct and resubmit rejected applications at no penalty, the rules say.

The cash-for-guzzlers legislation, also known as "cash for clunkers," provides vouchers of $3,500 to $4,500 to consumers. 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 smaller 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.

By Automotive News