09/03/2009 05:12 am ET Updated May 25, 2011

Good News for Cash for Clunkers

The Senate’s path towards passing legislation (H.R. 3435) this week to infuse an additional $2 billion into the wildly popular cash for clunkers program just got a whole lot easier.

On Monday, two key senators, Sen. Dianne Feinstein [D, CA] and Sen. Susan Collins [R, ME], who vowed last Friday to vote against the bill unless it increased fuel efficiency standards for new cars purchased under the program, dropped their opposition and said that they now plan to vote for it. Had they insisted on the change, the whole program would likely have been scrapped. Congress would have had to wait until September when the House returns from recess so that that chamber could approve the amended version of the bill before sending it to become law. Transportation Secretary Ray LaHood said over the weekend that in that case he would shut the program down rather than have it sit empty for more than a month.

Feinstein and Collins lifted their insistence on stricter fuel-efficiency requirements after a report indicated that consumers using the program so far were voluntarily choosing highly efficient vehicles:

"Today, we received a briefing from the National Highway Safety Traffic Administration (NHSTA) on the initial results of the 'Cash for Clunkers' or 'CARS' program. What we've learned is that American consumers are choosing vehicles with much higher fuel efficiency than is required. To date, it has proved to be both a stimulus and a fuel efficiency program.

Some 120,000 sales so far have been reviewed, and the fuel economy numbers continue to hold strong. The fleetwide average of new vehicles sold under the program is 22 percent higher than the average fuel economy of all new vehicles sold in 2008.

Almost 60 percent of new sales were passenger cars, 34.8 percent were SUVs and light trucks, and only 5.5 percent were the big trucks that posed a concern for us. The average voucher was $4,237, which means that the vast majority of sales are for more efficient vehicles that qualify for the higher voucher value of $4,500. We understand another 100,000-130,000 can be processed before the $1 billion is fully spent.

The bill still faces strong opposition from Senate Republicans, but with concerns over fuel efficiency out of the way, it’s expected to pass this week, keeping the program in effect a little while longer.

Photo by dave_7 used under a Creative Commons license.

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