**The US government says that a $3bn (£1.8bn) car scrappage scheme will end next week after funds ran out.**The Car Allowance Rebate System (CARS), dubbed the “cash for clunkers” plan, has been seen an industry life-line.
Owners of old cars and trucks gain up to $4,500 towards a new vehicle in exchange for their old model.
The programme was initially only allocated $1bn but a further $2bn was injected earlier this month after a boost in US car sales.
The “clunkers” programme was inspired by similar schemes in Europe.
Industry boost
Car industry analysts JD Power predicted that US vehicle sales would pass one million in August - for the first time in 12 months.
CASH FOR CLUNKERS
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Car owners can gain a voucher worth $3,500 for trading in a vehicle getting 18 miles per gallon or less for a new car getting at least 22 mpg
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Car owners can gain vouchers of $4,500 for those trading in a car getting 18 mpg or less in exchange for a model that gets at least 28 mpg
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The Car Allowance Rebate System is based on similar schemes in the UK, France, Germany, Italy and Spain that have boosted new car sales.
“This program has been a life-line to the automobile industry, jump-starting a major sector of the economy and putting people back to work,” Transportation Secretary Ray LaHood said.
“At the same time, we’ve been able to take old, polluting cars off the road and help consumers purchase fuel-efficient vehicles.”
Those backing the programme have applauded the scheme for its economic benefits - but some critics say these will only be temporary.
Earlier this week a group representing about 20,000 new car dealers in the US warned that those who accepted further sales under the scheme risked not being paid back the rebates they had already given customers.
There have been complaints that delays making in reimbursements has added to the strains on dealers already struggling amid tight credit and poor car sales.