Auto 2014
Auto 2014

CarMax Used Cars Incentive Program Launched

Auto retailer CarMax Inc. on Wednesday urged Congress to include used-car buyers in its proposed "cash for clunkers" legislation aimed at jump-starting the auto industry.

Congress is developing legislation that would provide vouchers to consumers who trade in their gas guzzlers and buy more fuel-efficient vehicles. Modeled after successful programs in Europe, the bills before both chambers of Congress are designed to get more gas-sipping cars on the road and boost auto sales, which dropped more than 40 percent among the Big Three carmakers in March.

While used-car buyers are eligible for vouchers under some versions of the proposal, other versions exclude them.

"More people will be able to participate in the program, more jobs will be saved, and more fuel-efficient vehicles will end up on the road by including used vehicles," Tom Folliard, the company's chief executive, said in a news release.

CarMax said its inventory currently includes more than 12,500 vehicles with more than 24 miles per gallon on the highway, which meets the fuel efficiency targets in the some of the legislative proposals.

Congressional leaders have signaled support for some type of car scrappage program and lawmakers are trying to develop a compromise that could win approval in both chambers.

With General Motors Corp. and Chrysler LLC surviving on billions in government aid and few takers at car dealerships, lawmakers have been trying to develop incentives to help the auto industry and respond to environmental groups that want better fuel efficiency in the vehicle fleet.

Analysts have estimated it could boost car sales by 750,000 to 1 million vehicles a year.

But in a recent note Credit Suisse analyst Gary Balter said while he doesn't see a recovery in car sales, either new or used, in the foreseeable future, the proposed legislation could eat into CarMax's sales.

In the Senate, Sens. Dianne Feinstein, D-Calif., Susan Collins, R-Maine, and Schumer want to give consumers a voucher for $2,500 to $4,500 to buy a new vehicle with better fuel efficiency. The older vehicle eligible for scrapping would need to get less than 18 miles per gallon.

The Senate version, which would apply to automobiles built around the globe, would also provide vouchers of up to $3,000 for used vehicles or credits of up to $3,000 for transit fares.

In the House, Rep. Betty Sutton, D-Ohio, wants to give car shoppers $3,000 to $5,000 when they turn in a vehicle for something more efficient. The program would be limited to cars built in North America and require the new car to get at least 27 miles per gallon.