CARSCARSCar Allowance Rebate SystemCar Allowance Rebate System

WebinarNADA Members

July 7, 2009

WebinarNADA Members

July 7, 2009

The LawThe 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

NHTSA’s DutiesNHTSA’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

Progress by NHTSAProgress by NHTSA

Web site established June 19: www.cars.gov; basic information and frequent updates

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

Consumer InformationConsumer Information www.cars.gov permits consumers to find EPA

mpg data (link to www.fueleconomy.gov) and learn basics of program

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

Program DatesProgram 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

Program BasicsProgram 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

Registration ProcessRegistration 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

Transaction ProcessTransaction 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

CARS Credit plus…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

Value of CreditsValue 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

Value of CreditsValue 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

Trade-in VehicleTrade-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

Category 3 TrucksCategory 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

Vehicle to Lease or PurchaseVehicle 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

Vehicle CategoriesVehicle 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

Vehicle CategoriesVehicle 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

Vehicle DisposalVehicle 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

Preventing FraudPreventing 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

Final PointsFinal 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