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$1,500 ante by Chrysler ups gambit to rev sales

August 22, 2009

Chrysler Canada says it is offering the country's most aggressive cash-for-clunker plan with incentives of up to $1,500, two days after Hyundai Auto Canada introduced the first program.

The company announced late yesterday that it would "turbocharge" the federal government's Retire Your Ride offer of $300, starting on Monday, with an incentive of an extra $500 to $1,500 if Canadians scrap their old auto and buy a new Chrysler model.

Hyundai announced Wednesday that it would top up the federal program with an offer of $500 to $1,000 indefinitely to customers who recycle their cars and buy new company models.

Both companies emphasize the environmental benefits of their programs but acknowledge that it also should boost business.

The cash is on top of any other company incentives in the marketplace for both companies. "This is the responsible thing to do," said Reid Bigland, Chrysler's president and chief executive, in a statement.

"Facilitating the removal of these vehicles from the road is the right move for our country, our health and our environment."

Under the Chrysler program, eligible customers must be the owners of a 1995 or older auto that still runs and has registration and insurance.

For example, motorists can get $500 for a new Jeep Patriot or Grand Caravan and $1,500 for a Grand Cherokee, Ram 1500 truck or Nitro model if they scrap their old autos. The program ends in the first week of January.

The conditions are similar to qualifying for the $300 federal rebate or other incentives such as transit passes under Ottawa's "Retire Your Ride" program that started earlier this year.

Industry watchers said they expect other automakers here to consider seriously such clunker incentives to generate sales in a market that has tumbled more than 16 per cent in the past year.

The Hyundai and Chrysler moves follow the success of an American government clunker program that has offered up to $4,500 (U.S.) to motorists.

It has pulled half a million high-polluting vehicles off American roads and sparked an equivalent number of sales during the past month in an industry where volumes are at their lowest levels in decades. The program has cost the U.S. government $3 billion and ends Monday.

The industry in this country, including automakers, dealers and unions, has pressed Ottawa to sweeten its $300 (Canadian) incentive for weeks in view of the U.S. program.

Environment Minister Jim Prentice said this week that he would decide by Sept. 1 whether to improve the program. About 13,000 motorists have collected the federal incentive to date.

Some analysts say higher government incentives will not help the industry much more here because it will pull forward future sales. Also, they say it will not reduce pollution dramatically because consumers would scrap their cars regardless within the next few years. - Business - $1,500 ante by Chrysler ups gambit to rev sales
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