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The "Cash for Clunkers" legislation has finally been passed by Congress, awaiting the signature of President Obama to begin its implementation. The new program, which from hereon will be officially called the Car Allowance Rebate System or CARS, aims to boost automobile sales through a trade-in scheme where owners of old and gas-guzzling vehicles can exchange their cars for new and fuel-efficient models.

The bill will provide vouchers of up to $4,500 to car owners and will be implemented from July 1 to November 1 of 2009, beyond which the bill will be reviewed for modifications if necessary. A total of $4 billion will be allocated for this program, which is part of President Obama's goal to stimulate the beleaguered US economy.

The bill paints a rosy landscape for the future of the US automobile industry, which is at present mired in deep financial woes. After all, the same program has been implemented in Germany and other European nations, as well as in China, with enormous successes. If the same scenario plays out in the US, the trade-in scheme is expected to revive the ailing car industry and have dealers' showrooms buzzing with customers again.

Ford Motor Co. (F), the only major US carmaker that is in relatively good shape despite the financial downturn, welcomed the bill. Ford Motor's mass production assembly lines continue to produce Ford, Lincoln, and Mercury cars, with its biggest sales in its line of Ford Mustangs and F-Series pickups. With a small share in Mazda and having one of the biggest auto-financing companies - Ford Motor Credit - as one of its financial subsidiaries, Ford Motor is the only major US car manufacturer that did not file for bankruptcy and could be the first one to benefit from the CARS program.

This program is seen by many industry experts as another concrete expression of the federal government's continued commitment to the auto industry, following the provision of $19.4 billion to General Motors (GMGMQ) recently, with another $30 billion to be given later on. Detroit-based General Motors, a major manufacturer of cars and trucks, filed for bankruptcy in 2009 due to major sales losses from its brands Buick, Cadillac, Chevrolet, GMC, Pontiac, Saab, and Saturn. The US government bailed the company out with funds to restructure its operations and settle conflicts with its labor unions. With the CARS program, the bailed-out auto manufacturer has a good chance of recovering.

Aside from the direct effect on auto manufacturers, the CARS program is expected to boost the steel industry, such as the Luxembourg-based Arcelor Mittal (MT), the world's largest steel producer, and Fortune 500 steel companies U.S. Steel (X) and AK Steel Holding (AKS), when enormous quantities of steel will be required during actual production.

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