Summary
I'm not as sure as the auto makers seem to be regarding what they see as a "bottoming out" of auto sales in March. There is still a long way to go before I'm comfortable with that statement, but the time might be right for the U.S. to get on board with the "cash for clunkers" plan that is working in Italy and Germany.
Analysis
For several months Congress has been kicking around various "cash for clunkers" deals after seeing positive results from similar plans in Italy and Germany.
Presently, there are two bills being offered up. The only significant difference would be whether the plan would cover vehicles manufactured outside the U.S. Either plan certainly is worthy of serious consideration.
March sales results from Germany and Italy, two countries being helped by government scrapping incentives, showed dramatic gains last month.
In Germany, registrations increased 40%. In Italy, a 24% rise in registrations was celebrated because it was the first increase in a year. France reported a an 8% rise in registrations from a year ago.
The German government car-scrapping program prompted their manufacturing association to forecast double-digit increases in April and May.
In Italy, car orders, an indication of future sales, rose 36%, a promise of positive registrations in April.
In the U.S., the House bill favored by Ford, GM, Chrysler and the UAW would offer vouchers of $3000 to $7500 to owners of vehicles at least 8 years old to buy more fuel-efficient vehicles built in North America.
Environmental groups and foreign auto makers oppose that bill. Toyota and Honda are also opposed, noting that the Toyota Prius and Honda Insight wouldn't qualify.
As for where to get the money, President Obama, a supporter of the idea, said he wanted to identify parts of the Recovery Act that could be trimmed. But it isn't clear what those parts would be, and any such trimming would prompt opposition from supporters of whatever program was losing money.
