Understanding the Car Allowance Rebate System (CARS)

Learn about the Car Allowance Rebate System (CARS) and how it operates to provide incentives for trading in older, less fuel-efficient vehicles.

The Car Allowance Rebate System (CARS), commonly referred to as "Cash for Clunkers," was a U.S. government program that aimed to stimulate the economy and promote fuel efficiency and cleaner air by encouraging consumers to trade in their older, less fuel-efficient vehicles for newer, more fuel-efficient ones. The program was officially known as the Consumer Assistance to Recycle and Save Act of 2009 and was signed into law by President Barack Obama in June 2009.

Key points about the Car Allowance Rebate System (CARS) include:

Objective: The primary objectives of the CARS program were to:

  1. Stimulate the Economy: Boost new car sales and support the struggling automotive industry during the economic recession.

  2. Improve Fuel Efficiency: Remove older, gas-guzzling vehicles from the road and replace them with more fuel-efficient, environmentally friendly cars.

How It Worked:

  1. Eligibility: To participate, consumers needed to have a vehicle that met certain criteria, including being drivable, registered for the past year, and having a combined city/highway fuel economy rating of 18 miles per gallon (MPG) or less.

  2. Trade-In: Participants brought their eligible trade-in vehicles to participating dealerships.

  3. Rebate: Upon trade-in, consumers received a credit or rebate, typically between $3,500 and $4,500, which could be used toward the purchase or lease of a new, more fuel-efficient vehicle.

Fuel Efficiency Requirements:

  • If the new vehicle achieved between 4 and 9 miles per gallon more than the old vehicle, the rebate was $3,500.
  • If the new vehicle achieved 10 or more miles per gallon over the old vehicle, the rebate was $4,500.


  • The CARS program led to a surge in new car sales, providing a boost to the automotive industry during a challenging economic period.

  • It led to the removal of older, less fuel-efficient vehicles from the road, which was expected to reduce greenhouse gas emissions and improve air quality.


  • The program was criticized for running out of funds quickly due to its popularity, leaving some eligible participants without the promised rebates.

  • Critics argued that it may have destroyed some valuable classic cars that were traded in as clunkers.

  • Some environmentalists argued that the program's focus on promoting new car sales might not have been the most effective way to reduce emissions and promote sustainability.

The CARS program ran for a limited time in 2009 and eventually exhausted its allocated funds. It was seen as a temporary measure to address specific economic and environmental goals during a challenging period. While it had both supporters and critics, it remains a notable part of U.S. economic and environmental policy history.

Car Allowance Rebate System (CARS).

The Car Allowance Rebate System (CARS) was a federal program in the United States that provided cash-for-clunkers rebates to consumers who traded in their old, less fuel-efficient vehicles for new, more fuel-efficient vehicles. The program was designed to stimulate the auto industry and reduce greenhouse gas emissions.

The CARS program was implemented in two phases. The first phase ran from July 27 to August 1, 2009, and provided rebates of up to $4,500 for new car purchases and $3,500 for new light truck purchases. The second phase ran from November 2, 2009 to February 28, 2010, and provided rebates of up to $3,500 for new car purchases and $2,500 for new light truck purchases.

To qualify for a CARS rebate, consumers had to trade in a vehicle that was at least 8 years old and that got less than 18 miles per gallon in combined city and highway driving. The new vehicle had to get at least 22 miles per gallon in combined city and highway driving.

The CARS program was very popular, and it generated over 700,000 trades. The program is estimated to have increased the sale of new vehicles by over 300,000 and to have saved over 2.1 billion gallons of gasoline over the lifetime of the vehicles that were traded in.

The CARS program was controversial, with some critics arguing that it was a waste of taxpayer money and that it benefited the auto industry at the expense of consumers. However, a 2011 study by the Congressional Budget Office found that the CARS program had a positive impact on the economy and that it saved the government money in the long run.

Overall, the CARS program was a successful program that stimulated the auto industry, reduced greenhouse gas emissions, and saved consumers money on gasoline.