CHICAGO, Aug. 6 (Xinhua) -- As a huge hit with consumers and generating about 250,000 incremental sales, the "cash-for-clunkers" incentive program received a new boost of 2 billion U.S. dollars on Thursday night after the U.S. Senate voted 60 to 37 to approve the measure.
Last week the federal government nearly suspended the cash-for-clunkers program because consumers had burned through the budgeted 1 billion dollars in only four days.
Administration officials said that the extension will subsidize the sale of another 500,000 new vehicles. Consumers can get a rebate of up to 4,500 dollars if they trade in gas guzzlers for fuel-efficient vehicles at least through Labor Day in early September.
The White House also supports the extension of the popular program. President Barack Obama has already said he will sign it.
According to government and industry officials, the consumer response had been overwhelming since dealers began offering "clunker" rebates in July.
Across the country, auto dealers have reported a greater rush to stores and rapidly growing sales numbers.
Bill Russo, president and founder of Synergistics Limited, has over 15 years' experience as an automotive executive. "The initial one billion U.S. dollars invested in the program generated approximately 250,000 incremental sales, or an increase of about 20 percent from the normal selling rate. The seasonally-adjusted sales rate was over 11 million units in July, the best performance this year," he told Xinhua in an exclusive interview.
"Companies like Ford and Hyundai saw year-over-year sales increases for July. Others saw improvements over prior-month selling rates," Russo added.
According to U.S. officials, sales under the cash-for-clunkers program have hit 180,000 vehicles so far. The star seller of the "clunker" program was Toyota's Corolla Sedan, which surpassed the Ford Focus as the best-selling vehicle. The Honda Civic came in third.
Under this program, the new vehicles sold average 25.3 mpg, while those traded in only got 18.5 mpg.
Talking about other benefits, Russo pointed out that the program was encouraging American consumers to trade in their cars for smaller, more fuel efficient ones.
"The consumer movement toward more fuel efficient cars may outlast the program, and this will lower fuel consumption and provide environmental benefits," he said.
The majority of the U.S. Senate supports the program. U.S. Senator Debbie Stabenow called the program "one of the most important and successful stimuli we have had. It has not only boosted auto sales but the overall economy as well."
However, other senators disagree and have asked for amendments to the program such as excluding richer consumers and increasing the amount of vouchers to help lower-income Americans purchase vehicles.
Arizona's Republican Senator John McCain, who led the charge against putting any more money into the program, blasted it as an unfair giveaway of taxpayer dollars.
He criticized the program for increasing debt in an unfair effort to subsidize the car industry over other small deserving businesses.
Despite the popularity and initial success of the cash-for-clunkers program, some experts have also voiced concerns.
Russo pointed out that the money allocated to the program will run out very quickly. He said although the cash-for-clunkers program has given the U.S. auto industry a much-needed boost, the sales increases might not last long after the program ends.
In addition, "dealers have complained that the program was very cumbersome and bureaucratic," Russo told Xinhua. "The process for determining (the) rebate level and applying for reimbursements from the government is very difficult. In comparison, China's method of lowering the consumption tax rate was very simple to implement."
Bob Confer, an opinion columnist for the Niagara Gazette, pointed out that cash-for-clunkers will create a temporary bubble very similar to the housing bubble, the bursting of which helped spawn the current economic recession.