WASHINGTON — The House on Tuesday approved a "cash for clunkers" bill that aims to boost new auto sales by allowing consumers to turn in their gas-guzzling cars and trucks for vouchers worth up to $4,500 toward more fuel- efficient vehicles.
President Barack Obama has encouraged Congress to approve consumer incentives for new car purchases as part of the government's work to restructure General Motors and Chrysler. The House approved the bill 298-119.
Supporters pushed for the measure to stimulate car sales and increase the fleet of fuel- efficient vehicles on the nation's highways. The auto industry has sought the incentives after months of poor auto sales. In May, overall sales were 34 percent lower than a year ago.
"Stimulating sales is the only way to get the auto industry back on its feet," said Rep. Donald Manzullo, R-Ill.
General Motors Corp. and Chrysler LLC have received billions of dollars in government aid, and the entire auto industry has watched car sales plummet during the past year. In May, overall sales were 34 percent lower than a year ago.
"Our industry has been stuck in neutral and really has not started to move," said Larry Kull, president of Marlton, N.J.-based Burns Kull Automotive Group, which includes GM, Honda and Toyota dealerships.
The vehicle scrappage bill has been under negotiations for months as lawmakers try to find a solution that boosts car sales while providing some environmental benefits. Proponents have pointed to similar programs in Europe that have enhanced auto sales.
Opponents said the bill failed to include incentives for used vehicles and represented an artificial incentive for the industry.
"It's defying the laws of economics and saying we can manufacture enough of a demand to keep the auto industry afloat," said Rep. Jeff Flake, R-Ariz.
Under the House bill, car owners could get a voucher worth $3,500 if they traded in a vehicle getting 18 miles per gallon or less for one getting at least 22 miles per gallon. The value of the voucher would grow to $4,500 if the mileage of the new car is 10 mpg higher than the old vehicle. The miles per gallon figures are listed on the window sticker.
Owners of sport utility vehicles, pickup trucks or minivans that get 18 mpg or less could receive a voucher for $3,500 if their new truck or SUV is at least 2 mpg higher than their old vehicle. The voucher would increase to $4,500 if the mileage of the new truck or SUV is at least 5 mpg higher than the older vehicle. Consumers also could receive vouchers for leased vehicles.
The bill would direct dealers to ensure that the older vehicles are crushed or shredded to get the clunkers off the road. It was intended to help replace older vehicles, built in model year 1984 or later, and would not make financial sense for consumers owning an older car with a trade-in value greater than $3,500 or $4,500.