Car Dealers Trying to Continue "Cash for Clunkers" with Their Own Twist

It's called the "Auto Stimulus Plan" and it was launched at the same time as "cash for clunkers" as a way to help car shoppers who didn't have a qualifying trade-in.

Now that "cash for clunkers" has ended, the organizers are hoping car shoppers see it as a replacement to the terminated program.

Here's how it works: The Auto Stimulus Plan offers incentives up to $4,500 for a qualifying trade-in until November 1, 2009. The only requirement is that the vehicle being traded in be:

• 2006 model year or older
• In working condition
• Owned and registered for at least 6 months

It all sounds good at first, but when you delve deeper into the details, it's clear that the program is nowhere near as good as "cash for clunkers".

The "Auto Stimulus Plan" incentive is based on a percentage of the average trade-in value set by the NADA Official Used Car Guide. If you buy a new car that gets 2 mpg better than your trade-in, the incentive is 10% of the trade-in value as set by the NADA Guide. If you buy a car that gets at least 5 mpg better, than the incentive is 20% of the trade-in value.

So let's say you have a 1999 Jeep Grand Cherokee that you're trading in as part of the program. NADA Guides might have it valued at $3,000. Under the "Auto Stimulus Plan", the maximum incentive you would get is $600 (20% of $3,000). If you were to sell this car in a private transaction, you would likely get more than $3,600 for it. Furthermore, some dealers are willing to pay more than what NADA Guides lists anyway, so it's possible you could get a better deal on the trade-in just by shopping it around to other dealers.

The only way to qualify for the full $4,500 incentive is to trade-in a car worth nearly $23,000. There just aren't many models that dealers are willing to buy at that price.

In our opinion, the "Auto Stimulus Plan" seems like a clever way for dealers to market themselves. Car shoppers are unlikely to save a significant amount through this program.