Cash for Clunkers; German program a huge success, but is it ready for prime time in America?(NEWS)

Byline: BOB GRITZINGER & GREG KABLE

One proposed solution to prop up new-car sales in the United States involves paying bonuses to owners of older vehicles who send their cars to the scrapyard and buy new ones.

Proponents say that not only does the auto industry benefit, but so does the environment, as emissions decrease and fuel economy typically improves in newer models.

Critics, however, say that scrapping older vehicles hurts collectors by reducing the number of older models available and also hurts those least able to afford to buy newer vehicles by driving up the price of used cars.

"It definitely could have a negative effect on the collector community, said McKeel Hagerty, CEO of Hagerty Insurance, which specializes in insuring collector vehicles. "What's sitting out there now that's not too appealing that might be a collector in the future? Lots of future collector cars could be destroyed.

Hagerty and others say that the scrappage idea really is an auto-industry bailout masquerading as a green programmost cars scrapped are more likely to be the third or fourth cars in a family, which are rarely driven and therefore contribute little to environmental problems.

"Scrappage programs don't work. They affect collectors, hobbyists and lower-income people, said Stuart Gosswein, director of regulatory affairs for the Specialty Equipment Market Association, an automotive aftermarket group. "Our mantra has been to just give vouchers to people to buy a new or a better used car, without tying it into scrapping an older one.