Exclusive: U.S. Cash For Clunkers Paid $20.7 Million For Volkswagen Diesels With Faked Emissions

Cash for Clunkers—the $3 billion U.S. government program from 2009 designed to boost the auto industry by spurring sales of fuel-efficient vehicles—spent $20.6 million helping buyers of Volkswagen diesel cars and wagons now under fire for software that faked their emission tests.

A Yahoo Autos analysis of the 690,114 vehicle sales covered by the program found that the U.S. government provided $4,500 rebates on 4,599 VW Jettas and Jetta Sportswagens now under recall. Those models, from the 2009 and 2010 model year equipped with the 2-liter turbodiesel, were highly popular in some areas because their high mileage ratings qualified them for the largest rebate under Cash for Clunkers.

The program, launched as the industry struggled in the midst of soaring gas prices and the great recession, allowed owners of older gas-guzzlers to trade into more fuel-efficient models as long as the old car was destroyed, with a $3,500 or $4,500 credit on the new purchase depending on its fuel efficiency. After the first $1 billion was claimed in a matter of days in July 2009, Congress and President Barack Obama rushed through an additional $2 billion, and the program ended in August 2009. The credits were paid to dealers, who marked down the prices paid to buyers.

“More American consumers will have the chance to purchase newer, more fuel efficient cars and the American economy will continue to get a much-needed boost,” Obama said when signing the $2 billion extension.

In September of that year, VW touted its success under the program the month before, saying it had a “sold-out situation of our model year 2009 TDI inventory.” A month later, HybridCars.com quoted a VW executive saying there were still long waiting lists for diesel Jetta Sportswagens in California.