Mexican Cash for Clunkers Still Disappointing

The success of the US Car Allowance Rebate System wowed everybody around the world so other countries are trying to follow the American example in order to revive their local auto sectors. Unfortunately, it appears the scheme is not working as it should in Mexico, a country which debuted a scrapping program at about the same time as the United States but, compared to the US equivalent, the local campaign brought very poor sales.

The reason is, according to edmunds.com, the lack of junking stations as Mexico currently provides only three such units. Because of this, dealers are limited when taking over older vehicles in exchange for new ones as the aforementioned junking stations cannot cope with the demand.

The Mexican government approved $20 million for the first part of the plan, with every company selling cars in the country getting different amounts of money depending on their market share and the number of eligible markets.

The aforementioned source writes that General Motors will receive $4.7 million while Renault Nissan will get as much as $4.3 million. Volkswagen comes third with $3.7 million, followed by Chrysler with $3 million and Ford with $2.8 billion. Ford is next with $2.8 billion and Toyota and Honda at about $300,000 each. However, as edmunds.com writes, all funds are suspended until the government solves the junking infrastructure problem.

As part of the scheme, Mexico is offering up to $1,100 to every consumer who agrees to trade-in an old car and buy a new and greener model. For the sake of comparison, the United States is giving up to $4,500 to those who are eligible for the program.