Hyundai begins giving cash for clunkers rebates

Hyundai has begun giving cash for clunkers rebates, even though the official Car Allowance Rebate System (CARS) doesn’t roll out until around the July 23, according to the official cars.gov Web site. (Read: "Cash for clunkers not ready yet.") Consumers shopping other brands who want to take advantage of the cash-for-clunkers trade-in deal from the government may be left in limbo for the next three weeks, unless other automakers step up with similar dealer-assistance programs.

The CARS bill that President Obama signed into law on June 24 says the program is good from July 1 to Nov 1. But the program doesn’t officially take effect for 30 days, or until about July 23. Those three weeks provide the National Highway Traffic Safety Administration (NHTSA) time to establish the specific methodology for the federal government to reimburse dealers, ensure the old cars that qualify are crushed, and prevent fraud.

So for most of July, consumers with clunkers they want to trade in are left waiting – unless they want to buy a Hyundai. On Monday Hyundai announced a new incentive program loaning dealerships the money to take clunkers in trade before the program officially gets rolling. The company says it has already sold taken its first “clunker” in trade, a 1995 Ford Explorer traded on a Hyundai Elantra Touring wagon.

Other brands could follow Hyundai’s lead, though the National Automobile Dealers Association (NADA) is recommending its members don’t start accepting clunkers in trade for rebates until NHTSA starts the program.

Before buying a Hyundai, or a model from any other brand, be sure to check the Consumer Reports ratings to ensure you are getting a good car and a good deal. See a complete list of Consumer Reports recommended models in our interactive new car selector, available to online subscribers.

Also read, "Cash for clunkers: Recommended cars that qualify for a voucher" and “Cash for clunkers: The best gas guzzlers to junk.”

—Eric Evarts

Judge approves "old" GM bankruptcy sale to "new" GM

Late yesterday, U.S. Bankruptcy Court Judge Robert Gerber approved the sale of General Motors to a new corporation, which will allow the company to come out of bankruptcy as early as Thursday.

The new company will be owned by:

• The United States government—a 60.8 percent stake
• A trust fund (VEBA) that provides medical benefits for United Auto Workers retirees—17.5 percent
• The governments of Canada and the province of Ontario—11.7 percent
• Bondholders of the old GM—10 percent.

Objectors, who included people ranging from consumer groups to bondholders, failed to present a viable alternative to the bankruptcy, the judge said. He allowed a four day stay of the sale until Thursday afternoon for appeals. Friday, July 10, is the last day the U.S. Department of the Treasury has agreed to extend any loans to the old GM.

The new GM will include Buick, Cadillac, Chevrolet, and GMC brands, with the automaker divesting itself of Hummer, Pontiac, Saab, and Saturn. It will also include some overseas operations, including those in China and Brazil. GM continues to work with potential buyers for its European operations.

The court-approved sale leaves behind hundreds of consumers who had personal-injury claims against GM for alleged defective products. (Read: "New GM" will cover future product-liability claims, but not pending ones.")

For most consumers, however, we expect the transition to the new company to be relatively transparent. The company has said it will still back warranties on all existing cars. If you own a Saab or Saturn new ownership may bring changes at your dealership, as these brands transition under new ownership. Hummer may be sold to Chinese truck maker Tengzhong. Pontiac will be closed. Through these changes, it is expected that more dealerships will also close.

If you’re thinking of buying a GM car or truck, the company is offering great incentives right now. But it’s important to remember that any deal is only as good as the vehicle you’re buying. Consumer Reports recommends the Buick Lucerne V8, the Cadillac DTS, the Chevrolet Avalanche, HHR, Malibu, and Silverado, and the GMC Sierra.

So if you’re looking for a new American car, these models might be a good place to start.

Use our new car selector to compare models based on ratings, reliability, safety, cost, and the factors that matter most to you.

—Eric Evarts

Read "What does the GM bankruptcy mean to you?" To get more answers to the most common questions and concerns about GM’s bankruptcy, visit our Auto Crisis hub.

Cash for Clunkers not ready yet

Officially, the federal CARS (Car Allowance Rebate System) rebate system kicked off yesterday. But don’t drag your clunker down to your local dealership just yet. According to the government’s official CARS Web site, the program won’t be up and running until around July 23, 30 days after President Obama signed the “Cash for Clunkers” act into law.

That’s because mechanisms for dealers to sign up for the program and to be reimbursed the rebate money may take a few weeks to implement. So, it may take a little bit longer before you can take advantage of the program. The CARS program will provide rebates of $3,500 or $4,500 to new-car buyers who trade in vehicles that get lower mileage for scrap. For more details see our earlier post. That hasn’t stopped some Web sites from springing up to lure consumers to register and give their names to dealerships as sales leads.

For the record, cars.gov is the only official cash-for-clunkers Web site. There will be no need for consumers to register for the program, and rebates will come directly from dealers, not in the form of physical vouchers.

—Eric Evarts

"New GM" will cover future product-liability claims, but not pending ones

After the Chrysler bankruptcy left consumers without recourse to the company for potential product defects, GM had originally sought a similar outcome for itself. But under pressure from the government and consumer groups, GM has now agreed to stand behind product liability claims for all GM cars and trucks that are filed after the company emerges from bankruptcy, according to court documents (PDF).

Left behind in the new agreement are consumers who have existing liability claims against GM that were pending before the automaker filed for bankruptcy. Many of these consumers have been left as the most vulnerable members of society as a result of car accidents or incidents allegedly caused by defects in GM vehicles. Among the 300-some claimants are quadriplegics and catastrophically injured children, says Sean Kane, CEO of Safety Research and Strategies of Rehoboth, Mass.

In GM’s initial bankruptcy filing, the company planned to abandon these claims.

Bankruptcy law is designed to allow companies to eliminate debt, paying off little or none of it. In most cases, however, these debts are to investors and banks that loaned the companies money. There have been few other cases in which consumers who have suffered catastrophic injuries are listed among the company’s creditors and may be left with little or no recourse to compensation for their claims.

The new agreement was reportedly reached in conjunction with the Obama administration’s Autos Task Force to expedite the company emerging from bankruptcy. It is part of a revised purchase and sale agreement which also deals the claims of other creditors. GM is now expected to emerge from bankruptcy in a matter of days. Hearings begin today to begin approving the sale of GM’s “good assets” to the new company.

Consumer advocacy and safety organizations are lobbying to have consumers with existing product-defect claims against GM covered by the new GM. Safety Research and Strategies estimates that 35 percent of all death and injury claims reported to the National Highway Traffic Safety Administration involve GM cars and trucks.

Meanwhile, a bill, called the “Jeremy Warriner Consumer Protection Act of 2009,” has been introduced in the House of Representatives that would require GM and Chrysler to carry insurance that would cover accident victims who win judgments against the companies. Warriner is a paraplegic who lost his legs in a fire when he was pinned in his Jeep Wrangler after a side collision. If passed into law, this could help people with pending claims.

—Eric Evarts

President Obama signs cash for clunkers bill

President Obama today signed the “cash for clunkers” law, now known as “Car Allowance Rebate System,” that has been touted as a key stimulator for the auto industry and an environmental aid. The law provides $1 billion in funding, with $50 million allocated for administration. The specific guidelines for the program will be revealed in the next 30 days, when the plan takes effect on August 1.

The CARS program is intended to encourage consumers who own an older, gas guzzler to purchase or lease a new, more fuel-efficient vehicle. In doing so, it is expected to give the auto industry a sales boost, while at the same time transitioning participating car owners to thriftier vehicles and thereby reducing national fuel consumption.

The National Highway Traffic Safety Administration (NHTSA) working with manufacturers, dealers, and recycling centers to develop the program specifics. Dealers will need to register to participate.

Car Allowance Rebate System basics
While the details are being finalized, the government has released some elements from the program, which have changed little since our previous reports.

To qualify, the trade-in vehicle must:

• have been manufactured less than 25 years before the date you trade it in
• have a “new” combined city/highway fuel economy of 18 miles per gallon or less
• be in drivable condition
• be continuously insured and registered to the same owner for the full year preceding the trade-in

To check the combined city and highway fuel economy, consumers are directed to fueleconomy.gov.

Leases on new vehicles are eligible, so long as the lease is for at least five years—a very long time for a lease. The manufacturer's suggested retail price cannot exceed $45,000. Used cars are not part of the program.

Purchased vehicles may be from domestic or foreign brands, through participating dealers.

The chart below spells out the scenarios, matching the trade-in and purchase to the credit. These funds would be applicable at time of purchase.

Car Allowance Rebate System

	Passenger car light-duty	Small truck	Large light-duty truck (6,000 – 8,500 pounds)
Minimum fuel economy for a new vehicle (EPA  combined)	22 mpg	18 mpg	15 mpg
$3,500 credit	Mileage improvement of at least 4 mpg	Mileage improvement of at least 2 mpg	Mileage improvement of at least 1 mpg or trade-in of a work truck.*
$4,500 credit	Mileage improvement of at least 10 mpg	Mileage improvement of at least 5 mpg	Mileage improvement of at least 2 mpg

*Trade-in must be at least pre-2001.

The government has launched a Web site to answer common questions at www.cars.gov , where the law pdf can be reviewed.

Read:
Cash for clunkers: Recommended cars that qualify for a voucher
Cash for clunkers: The best gas guzzlers to junk
Cash for clunkers bill cuts fuel consumption–running the numbers

—Eric Evarts and Jeff Bartlett

Auto news highlights – June 23, 2009

2010 Buick LaCrosse gets four-cylinder engine
Times are a changing. A direct-injection four-cylinder engine will join a 255-hp, 3.0-liter V6 and 280-hp, 3.6-liter V6 later this calendar year. The new 2.4-liter base engine will produce 182 horsepower. Matched with a six-speed automatic transmission, GM estimates it will enable the luxurious sedan to achieve 20 mpg city, 30 mpg highway. [Consumer Reports New Car Preview]

Ford, Nissan, and Tesla receive billions in green tech loans
The federal government set aside $25 billion to advance green automotive technologies, and today it was announced that Ford, Nissan, and Tesla would receive significant loans from this fund. Chrysler and General Motors had previous requests denied, due to their financial situations. Ford will receive $5.9 billion, Nissan $1.6 billion, and Tesla $465 million in advanced technology financing from the Energy Department program. [Reuters]

GM asked to recall 2000-01 model year after trunk deaths
Kids and Cars has asked General Motors recall 2000-01 model year  sedans after two children perish in locked trunk. These cars were made before trunk-release latches became standard equipment. An aftermarket retrofit kit called the Quick-Out Emergency Trunk Release is available for $18 for installation in older cars. [Consumer Reports Safety Blog, Consumer Reports Kids and Car Safety hub]

Mini to expand dealer network
Mini USA announced that it will expand its 83-store network by 17 dealerships over the next year and a half. Mini has been well placed to serve increased consumer demand for fuel-efficient cars. New locations are expected in the following cities: Birmingham, Alabama; Pensacola, Florida; Alexandria, Virginia; Austin, Texas; Seattle, Washington; Fort Myers, Florida; El Paso, Texas; Ontario, California; Louisville, Kentucky; Raleigh, North Carolina; Knoxville, Tennessee; Loveland, Colorado; Madison, Wisconsin; Mount Laurel, New Jersey; Allentown, Pennsylvania; San Diego, California and Tempe, Arizona. [Mini, AutoBlog]

No improvement seen for rear seat belt use
Rear seat belt use in the U.S. remains statistically unchanged at 74 percent for 2008 compared to 76 percent in 2007 according to the National Highway Transportation Administration.  Belt use in the rear seats is lower than the front seats, which is at 83 percent. The survey found belt use in rear seats is higher in states that have laws for belt use in all seats. [NHTSA, Consumer Reports]

New Jersey to ban GPS operation while driving
In a move to reduce driver distraction, Democratic State Assemblyman L. Harvey Smith has introduced a bill to “prohibit the manual operation of a global positioning system (GPS) device or similar navigation device by the operator of a moving motor vehicle,” according to Fox News. The legislation is the first of its kind, and the vote will have an important impact on how millions of drivers use these popular devices. [Fox News]

Legislation introduced to create teen driving standards
Some House of Representative members have introduced legislation that would set minimum standards for teen driving in order to reduce death and injuries; automobile crashes are the leading cause of deaths of teens in the U.S. The legislation would act as an incentive with rewards of funding for states that enact graduated driver licensing laws (GDL). Those states that don’t comply will have federal funding withheld. The GDL program will provide a three-stage licensing program, restrictions on night driving and restrictions against driving with more than one other person under 21 during the first two stages. [House, IIHS]

Cash for clunkers bill cuts fuel consumption–running the numbers

Environmentalists and even some Democratic U.S. Senators have criticized the cash for clunkers legislation that President Obama is expected to sign as “Handouts for Hummers.”
 
They say the bill doesn’t set high enough fuel economy targets especially for SUVs. Cars have to get at least 22 mpg and 4 mpg better than the vehicles traded in, to be eligible for a $3,500 voucher. Light trucks and SUVs only have to get 18 mpg and 2 mpg better than the vehicle traded in to be scrapped. Full-sized SUVs only have to get 15 mpg, or an improvement of 1 mpg.

While those improved numbers may not sound like a lot, small mpg improvements can mean significant savings at the pump. Small mileage improvements to very inefficient cars yield bigger savings than similar mileage improvements to more efficient cars. To illustrate the point, the chart below lists five potential trades that would earn vouchers under the Cash for Clunkers program, and the amount of fuel and cash each would save. (We assume the cars are driven the national average of 12,000 miles per year. Mpg ratings are EPA-sourced combined averages, as the law specifies. And gasoline is $2.70 a gallon.)

We list five trade-ins from our “clunkers to junk” list and five Consumer Reports recommend cars that could replace them. Four of the cars get 5 mpg better than the car they are replacing; one gets 10 mpg better. The three light-trucks that achieve a 5 mpg improvement will get vouchers worth $4,500, while the car will get only a $3,500 voucher. The car trade that nets a 10 mpg improvement would earn a $4,500 voucher.

As the chart illustrates, if you own the new car for five years, the gas savings over the clunker can nearly double the dollars in your pocket when you add it to the amount of your voucher.

Trade-in	mpg	Purchase	mpg	Gallons saved per year	Money saved per year	Voucher
1993 Dodge Ram (4wd)	12	Chevrolet Silverado (V6, 2wd)	17	294	$794.12	$4,500
1998 Nissan Pathfinder (4wd)	15	Nissan Murano (AWD)	20	200	$540.00	$4,500
1996 Chevrolet  Astro	16	Ford Escape (4-cyl., AWD)	21	179	$482.14	$4,500
1998 Olds Aurora	18	Volvo C30	23	145	$391.30	$3,500
1998 Mercury Grand Marquis	18	Hyundai Elantra	28	238	$642.86	$4,500

—Eric Evarts

Update: President Obama signs Cash for Clunkers bill.

Congress passes cash for clunkers incentive

Congress passed the cash-for-clunkers bill last night that will give consumers vouchers of $3,500 to $4,500 to trade in an older car for a more fuel efficient one.

The measure was passed in the Senate as part of a war funding bill and is expected to cost $1 billion. It will go into effect as soon as President Obama signs it, as he is expected to do, and the program will last until November 1.

In that time, it is expected to spur about 150,000 consumers to buy new cars, according to Automotive News. Dealers must certify that old cars traded in for the voucher will be crushed and not resold.

If you’re considering buying a new car and have been waiting for the federal incentives, we published a list of Consumer Reports Recommended cars that qualify for a voucher. As for the most worthy cars to send to the crusher? Check out our list of best gas guzzlers to junk.

—Eric Evarts

Update: President Obama signs Cash for Clunkers bill.

Move over McCain, what would Captain America drive?

In the daily news overload, with 1s and 0s streaming from myriad, disparate sources, two things struck me on the same day this week:

• Marvel Comics announced that the original Captain America, Steve Rogers, would be resurrected and returned to his namesake comic book. (See video.)
• Senator John McCain declared that he was buying a Ford Fusion hybrid on Twitter.

Clearly, McCain is sending a signal with his latest purchase, taking the prized pole position in his vehicle fleet away from his coveted Cadillac CTS, according to the Associated Press.

A patriot, McCain is buying American, though his brand choice is telling. The Senator had voted against providing money to Chrysler and General Motors back in December, according to the Detroit Free Press, and he apparently doesn’t want to give them any of his own earnings now.

McCain isn’t alone in moving to Ford. President Obama replaced his trendy-but-thirsty Chrysler 300C with a politically correct Ford Escape hybrid just in time to freshen his image for the presidential campaign.

Last month, Ford Motor Company saw its sales drop just 24 percent from May 2008 to May 2009, compared with 30 percent for GM and 47 percent for Chrysler, according to AutoBlog. Like these politicians, consumers have made similar moves during this tumultuous time, though possibly for other reasons.

I’m left with mixed feelings about these vehicle choices. What do you think these or other politicians should drive? Without political aspirations, though with an eye on a Hollywood career, Captain America could exercise the freedom he has fought for since World War II in choosing a car. Perhaps the bigger question is, what would the Captain choose?

—Jeff Bartlett

Cash for clunkers: Recommended cars that qualify for a voucher

In the first part of this series, we featured a list of vehicles that met the qualifications for the cash for clunkers legislation working its way through Congress. Here, we present the second part of the puzzle– Consumer Reports recommended models that would make smart choices for motorists looking to take advantage of this program.

These are models that score well in Consumer Reports testing, have solid marks for safety, and average or better predicted reliability. Plus, they meet the government target for minimum fuel economy.

Make & model	EPA combined mpg	MSRP
Acura TSX	25	$29,675
Chevrolet HHR	24	24,730
Chevrolet Malibu (4-cyl.)	26	23,585
Ford Escape (4-cyl.)	21	25,470
Ford Escape Hybrid	28	25,470
Ford Focus	27	18,940
Ford Fusion (4-cyl., 2010)	25	22,145
Ford Fusion Hybrid (2010)	39	30,010
Honda Accord (4-cyl.)	24	22,795
Honda Civic	29	19,610
Honda CR-V	22	24,675
Honda Fit	31	16,020
Honda Odyssey	18	32,410
Hyundai Elantra	28	18,695
Hyundai Santa Fe	19	30,745
Hyundai Sonata (4-cyl.)	25	20,735
Hyundai Tucson (V6)	20	22,154
Kia Optima (4-cyl.)	25	22,795
Kia Sportage (V6)	20	23,565
Mazda3 (2.0L, 2010)	27	19,070
Mazda3 (2.5L, 2010)	25	20,700
Mazda5	23	22,615
Mini Cooper (base, MT)	32	21,700
Mitsubishi Outlander (4-cyl.)	22	22820
Nissan Altima 2.5S	26	22,705
Nissan Murano	20	33,330
Nissan Rogue	23	25,850
Nissan Sentra	28	18,855
Nissan Versa hatchback	29	16,675
Pontiac Vibe 1.8L	28	19,085
Scion tC	23	17,365
Scion xB	24	18,360
Scion xD	28	16,620
Subaru Forester	22	22,040
Subaru Impreza	22	19,106
Suzuki SX4 (FWD)	26	17,378
Toyota Camry (4-cyl.)	25	21,080
Toyota Camry Hybrid	34	29,720
Toyota Corolla	30	18,404
Toyota Highlander	19	38,575
Toyota Highlander Hybrid	26	43,770
Toyota Matrix S (2.4L)	24	21,180
Toyota Prius	46	24,803
Toyota RAV4 (4-cyl.)	24	25,405
Toyota Sienna	19	36,989
Volkswagen Jetta (2.5L)	24	23,580
Volkswagen Rabbit	24	19,725
Volvo C30	23	25,795

To see a complete list of Consumer Reports recommended models check out our ratings, available to online subscribers. Also read, “Cash for clunkers: The best gas guzzlers to junk.”

—Eric Evarts

Update: President Obama signs Cash for Clunkers bill.