SEMA eNews Vol. 12, No. 13, April 2, 2009

SEMA Urges President Obama to Oppose Vehicle Scrappage Programs

President Obama and his Auto Task Force initiated a series of actions to help rebuild the U.S. auto industry. In an open letter to the president, SEMA expressed a continued commitment to work with the president and the U.S. Congress toward that goal. SEMA also expressed its opposition to vehicle scrappage programs, also known as “Cash for Clunkers."

President Obama mentioned a willingness to consider including such a program within his auto restructuring plans.

In the letter, SEMA discussed the need to help consumers, automakers and dealerships with a program to stimulate new-car sales. Assistance could come in the form of government-issued vouchers toward the purchase of fuel-efficient new vehicles, and allowing consumers to deduct the car interest payments on their taxes. SEMA, however, strongly opposed tying the vouchers to a scrappage program.

Scappage programs accelerate the demise of older vehicles, which are then typically crushed into blocks of sheetmetal. Program supporters focus on a car's age or fuel-efficiency rating rather than its actual emissions or how much it is driven. SEMA has consistently warned against wasting taxpayer dollars on a program that may produce an artificial spike in sales, but does not reduce emissions nor increase fuel efficiency.

Automakers and dealers need to sell cars in order to survive, but potential buyers have hit the brakes in these tough economic times. Scrappage programs would actually deny vouchers to the majority of people who may want to buy a new car but don’t have an eligible older car to trade. Instead, these programs will be misused by those who own two or three older cars and seek to take advantage of the taxpayer giveaway.

Many of these cars aren’t frequently driven, if at all, so destroying them will not clean the nation’s air or make us less dependent on foreign oil.

While supporters tout a similar German program as evidence of success, the European Federation for Transport and the Environment, (the pan-European federation of environmental groups), has urged Germany and other countries to abandon scrappage subsidies because they do more environmental harm than good by artificially accelerating the car life cycle.

Scrappage programs hurt thousands of independent repair shops, auto restorers, customizers and their customers across the country. This industry provides thousands of American jobs and generates millions of dollars in local, state and federal tax revenues.

SEMA encouraged the president to help the entire auto industry with programs that focus the incentive where it counts: on the purchase of new vehicles and not destroying older cars.

Read SEMA's letter to President Obama.

For more information, contact Stuart Gosswein at stuartg@sema.org.

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