Car Allowance Rebate System - CARS
Categories: Econ, Tax, Company Management
Affectionately known as CARS (Car Allowance Rebate System).
CARS was an economic stimulus package utilized during the most recent recession.
Wonder which came first, the name of the program or the acronym? Had it been termed the Car Allowance Trade-In System, we would be talking about CATS, and not CARS...
The plan was put into place by the National Highway Transportation Safety Administration (NHTSA). The program allowed consumers to trade in less fuel-efficient autos for a voucher used toward the purchase of more fuel-efficient cars. The average rebate was around $4,000. The program, on the surface, seemed to be useful; however, many believe the cost exceeded any benefit to the economy.
While over 690,000 autos passed through this program, one study estimates that only 125,000 incremental sales resulted from this program. Of course, the Democrats argued with the Republicans as to who would and would have not bought a new car without it. One Congressman, a registered Independent, did state that his cousin was undecided as to whether he would have bought a new car had the program not been available. It's always about the politics.
Interestingly, the engines of the old cars were required to be destroyed so that dealers would not resell the older automobiles.
