March 17, 2009 / 10:48 PM / 11 years ago

Legislation seeks to boost U.S. auto sales

WASHINGTON (Reuters) - Automakers and their allies in Congress are taking another shot at legislation to stimulate U.S. auto sales by taking older, fuel-thirsty cars off the road.

A bill introduced on Tuesday by Representative Betty Sutton of Ohio would provide consumers with a $3,000 to $5,000 incentive to trade in less fuel-efficient vehicles that are at least 8 years old for new ones that achieve better mileage and emit lower emissions.

New cars that qualify for the incentive must get a minimum of 27 miles per gallon on the highway while pickups and sport utilities must archive at least 24 mpg.

The best performing vehicles would receive the highest benefit.

U.S. auto sales have plunged 40 percent this year due to recession and business and consumer credit woes, contributing heavily to financial distress at General Motors Corp (GM.N) and Chrysler LLC CBS.UL and less dire but still serious financial problems at Ford Motor Co (F.N).

Overseas automakers also support government efforts to spur sales. Manufacturers are already offering numerous financing deals and other incentives to lure buyers.

“This legislation will help consumers, stimulate our economy, improve our environment, reduce our dependence on foreign oil and help our domestic auto and related industries,” Sutton, a Democrat, said in a statement.

Proponents of the bill point to a similar program in Germany that is credited with helping to push auto sales 21 percent higher in February.

The legislation also offers transit vouchers in exchange for older, high emission vehicles.

Uncertain support and other political calculations prompted auto allies in the Senate to withdraw a similar measure from last month’s economic stimulus bill.

Reporting by John Crawley; Editing by Tim Dobbyn

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