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CARS Car Allowance Rebate System Webinar NADA Members July 7, 2009 Webinar NADA Members July 7, 2009
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The Law President Obama signed the Consumer Assistance to Recycle and Save Act on June 24 Establishes program within NHTSA to provide government funds to facilitate purchase or lease of new fuel-efficient vehicle in return for trade-in that is less fuel-efficient President Obama signed the Consumer Assistance to Recycle and Save Act on June 24 Establishes program within NHTSA to provide government funds to facilitate purchase or lease of new fuel-efficient vehicle in return for trade-in that is less fuel-efficient
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NHTSA’s Duties Issue a final rule in 30 days (by July 24) setting out requirements for participation and disposal of trade-ins Create an Internet Web site within 30 days to provide program information Develop a system for dealer registration Develop a system for processing transactions Develop a new organization within NHTSA to run program Prevent fraud; penalize violations Issue a final rule in 30 days (by July 24) setting out requirements for participation and disposal of trade-ins Create an Internet Web site within 30 days to provide program information Develop a system for dealer registration Develop a system for processing transactions Develop a new organization within NHTSA to run program Prevent fraud; penalize violations
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Progress by NHTSA Web site established June 19: www.cars.gov; basic information and frequent updateswww.cars.gov Web site established June 19: www.cars.gov; basic information and frequent updateswww.cars.gov Retained contractor to design registration and transaction system Obtained dealer registration data from OEMs Retained contractor to operate transaction review process Drafting rule so as to meet July 24 deadline Retained contractor to design registration and transaction system Obtained dealer registration data from OEMs Retained contractor to operate transaction review process Drafting rule so as to meet July 24 deadline
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Consumer Information www.cars.gov permits consumers to find EPA mpg data (link to www.fueleconomy.gov) and learn basics of program www.cars.govwww.fueleconomy.gov www.cars.gov permits consumers to find EPA mpg data (link to www.fueleconomy.gov) and learn basics of program www.cars.govwww.fueleconomy.gov Will soon contain list of eligible vehicles Will contain list of registered dealers Vehicle hotline expanded Added 866-CAR-7891 Ongoing media outreach Use press to disseminate information Warn against fraudulent sites Ad campaign being developed TV, radio, Internet, print Materials available for dealer use Will soon contain list of eligible vehicles Will contain list of registered dealers Vehicle hotline expanded Added 866-CAR-7891 Ongoing media outreach Use press to disseminate information Warn against fraudulent sites Ad campaign being developed TV, radio, Internet, print Materials available for dealer use
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Program Dates Law says rebates limited to transactions between July 1, 2009, and November 1, 2009 Program will end when funds are exhausted, even if before November 1 Law also says NHTSA has 30 days to issue rules to implement the program, and NHTSA will need all of that time to complete rule Deals made on or after July 1 risky for dealer because transaction may not meet all specifications; NHTSA not authorized to pay unless requirements met Law says rebates limited to transactions between July 1, 2009, and November 1, 2009 Program will end when funds are exhausted, even if before November 1 Law also says NHTSA has 30 days to issue rules to implement the program, and NHTSA will need all of that time to complete rule Deals made on or after July 1 risky for dealer because transaction may not meet all specifications; NHTSA not authorized to pay unless requirements met
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Program Basics Customers trading in an eligible vehicle receive monetary credit toward purchasing or leasing a new eligible vehicle If conditions are met, NHTSA makes an electronic payment to the dealer Trade-in vehicle must be crushed or shredded Customers trading in an eligible vehicle receive monetary credit toward purchasing or leasing a new eligible vehicle If conditions are met, NHTSA makes an electronic payment to the dealer Trade-in vehicle must be crushed or shredded
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Registration Process Dealer lists provided by OEMs in early July NHTSA’s contractor will send each dealer a registration letter starting in mid-July Dealer will follow instructions in letter to complete registration process Dealer will certify to abide by program rules and inform NHTSA of change in license or franchise System hopefully ready to begin registration by July 24 Submission of financial information completes registration 2-3 day process, confirmation of tax ID and bank or financial institution information Dealer lists provided by OEMs in early July NHTSA’s contractor will send each dealer a registration letter starting in mid-July Dealer will follow instructions in letter to complete registration process Dealer will certify to abide by program rules and inform NHTSA of change in license or franchise System hopefully ready to begin registration by July 24 Submission of financial information completes registration 2-3 day process, confirmation of tax ID and bank or financial institution information
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Transaction Process Registered dealer will have online access to CARS transaction system For each transaction, dealer will provide essential information using an online form: buyer info, VINs, mpg of each, etc. Submission will include attachments: registration, insurance proof, title, certification from disposal facility, deal sheet showing MSRP, salvage value, all rebates, etc. NHTSA will review all submissions, reject those that are incomplete or incorrect, and send payment on those that meet all requirements Registered dealer will have online access to CARS transaction system For each transaction, dealer will provide essential information using an online form: buyer info, VINs, mpg of each, etc. Submission will include attachments: registration, insurance proof, title, certification from disposal facility, deal sheet showing MSRP, salvage value, all rebates, etc. NHTSA will review all submissions, reject those that are incomplete or incorrect, and send payment on those that meet all requirements
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CARS Credit plus… CARS Act requires the dealer to use the CARS credit in addition to rebates or discounts offered or advertised by the dealer and/or OEM. The dealer may not use this credit to offset these rebates or discounts. Dealer can combine the CARS credit with other State and Federal incentives, e.g., the Hybrid vehicle credit. Dealer must disclose best estimate of “scrap value” to customer Dealer may retain $50 of that for administrative costs CARS Act requires the dealer to use the CARS credit in addition to rebates or discounts offered or advertised by the dealer and/or OEM. The dealer may not use this credit to offset these rebates or discounts. Dealer can combine the CARS credit with other State and Federal incentives, e.g., the Hybrid vehicle credit. Dealer must disclose best estimate of “scrap value” to customer Dealer may retain $50 of that for administrative costs
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Value of Credits New Passenger Car $3,500 credit if its combined fuel economy at least 4 mpg above that of trade-in $4,500 if difference at least 10 mpg New Category 1 Truck $3,500 if at least 2 mpg higher $4,500 if at least 5 mpg higher New Passenger Car $3,500 credit if its combined fuel economy at least 4 mpg above that of trade-in $4,500 if difference at least 10 mpg New Category 1 Truck $3,500 if at least 2 mpg higher $4,500 if at least 5 mpg higher
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Value of Credits New Category 2 Truck $3,500 if trade-in is Category 2 and new truck at least 1 mpg higher OR trade-in is Category 3 of MY 2001 or earlier $4,500 if trade-in is Category 2 and new truck at least 2 mpg higher New Category 3 Truck $3,500 if trade-in is Category 3 of MY 2001 or earlier and similar size or larger than new truck New Category 2 Truck $3,500 if trade-in is Category 2 and new truck at least 1 mpg higher OR trade-in is Category 3 of MY 2001 or earlier $4,500 if trade-in is Category 2 and new truck at least 2 mpg higher New Category 3 Truck $3,500 if trade-in is Category 3 of MY 2001 or earlier and similar size or larger than new truck
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Trade-in Vehicle CARS Act established four criteria Must be in drivable condition Must have been continuously insured, registered to the same owner for previous 12 months Must be less than 25 years old at time of trade-in Combined “new” fuel economy rating less than 18 mpg (Category 3 not rated) Category 3 work trucks no newer than MY 2001 CARS Act established four criteria Must be in drivable condition Must have been continuously insured, registered to the same owner for previous 12 months Must be less than 25 years old at time of trade-in Combined “new” fuel economy rating less than 18 mpg (Category 3 not rated) Category 3 work trucks no newer than MY 2001
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Category 3 Trucks May be traded in only for a Category 2 or Category 3 truck Not more than 7.5 percent of program funds available for purchase or lease of new vehicles in this category Once limit is reached, no more payments will be made for these transactions May be traded in only for a Category 2 or Category 3 truck Not more than 7.5 percent of program funds available for purchase or lease of new vehicles in this category Once limit is reached, no more payments will be made for these transactions
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Vehicle to Lease or Purchase CARS Act applies to new vehicles MSRP must not exceed $45,000 Must achieve certain fuel economy ratings Passenger vehicles at least 22 mpg Category 1 trucks at least 18 mpg Category 2 trucks at least 15 mpg Category 3 trucks no mpg requirement Other special requirements apply CARS Act applies to new vehicles MSRP must not exceed $45,000 Must achieve certain fuel economy ratings Passenger vehicles at least 22 mpg Category 1 trucks at least 18 mpg Category 2 trucks at least 15 mpg Category 3 trucks no mpg requirement Other special requirements apply
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Vehicle Categories Passenger automobiles Passenger cars Category 1 truck Non-passenger automobiles SUVs, small and medium pickups, small and medium cargo vans Passenger automobiles Passenger cars Category 1 truck Non-passenger automobiles SUVs, small and medium pickups, small and medium cargo vans
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Vehicle Categories Category 2 truck Large van or large pickup truck More than 115-inch wheelbase for pickups, more than 124-inch wheelbase for vans Category 3 truck Work truck rated between 8,500 lbs and 10,000 lbs gross vehicle weight rating (those with cargo beds 72 inches or more in length) and very large cargo vans Category 2 truck Large van or large pickup truck More than 115-inch wheelbase for pickups, more than 124-inch wheelbase for vans Category 3 truck Work truck rated between 8,500 lbs and 10,000 lbs gross vehicle weight rating (those with cargo beds 72 inches or more in length) and very large cargo vans
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Vehicle Disposal Dealer must certify that it will not sell, lease, exchange or dispose of trade-in for use as an auto in United States or any country Dealer must transfer trade-in to entity that will ensure that the vehicle is crushed or shredded Disposal entity can sell parts except engine block and drive train (unless drive train sold as separate parts) NHTSA will publish list of disposal entities NHTSA may include requirements for how engine can be rendered inoperative by dealer to reduce possibility of continued use Dealer must certify that it will not sell, lease, exchange or dispose of trade-in for use as an auto in United States or any country Dealer must transfer trade-in to entity that will ensure that the vehicle is crushed or shredded Disposal entity can sell parts except engine block and drive train (unless drive train sold as separate parts) NHTSA will publish list of disposal entities NHTSA may include requirements for how engine can be rendered inoperative by dealer to reduce possibility of continued use
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Preventing Fraud Statute provides for civil penalties up to $15,000 for violations; clerical errors are not violations NHTSA will be very aggressive in preventing fraud related to this program and punishing violators if it occurs Dealers, purchasers, and disposal entities will certify to the accuracy of all assertions they make as part of program Note: Willfully false statements may be punishable by criminal fines and imprisonment Dealers and disposal entities should anticipate audits by NHTSA and requests for records Statute provides for civil penalties up to $15,000 for violations; clerical errors are not violations NHTSA will be very aggressive in preventing fraud related to this program and punishing violators if it occurs Dealers, purchasers, and disposal entities will certify to the accuracy of all assertions they make as part of program Note: Willfully false statements may be punishable by criminal fines and imprisonment Dealers and disposal entities should anticipate audits by NHTSA and requests for records
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Final Points NHTSA is doing everything it can to make this a successful program The short time NHTSA has to implement the program creates significant challenges We understand how anxious everyone is to begin transactions—we hope you all understand the challenges We look forward to continued cooperation with all involved in the program For further information see www.cars.gov NHTSA is doing everything it can to make this a successful program The short time NHTSA has to implement the program creates significant challenges We understand how anxious everyone is to begin transactions—we hope you all understand the challenges We look forward to continued cooperation with all involved in the program For further information see www.cars.gov
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