The US is the latest country to launch a car scrappage scheme to boost the automotive industry.

The US government has announced details of its own car scrappage scheme, which it hopes will stimulate the car market, and encourage people to buy greener cars. 

The $1 billion (£608m) program will begin on 27 July, and allows consumers to receive a $3,500 or $4,500 discount from a car dealer when they trade in their old car and purchase or lease a new one. The replacement car, however, must be worth no more than $45,000.

Cars must be less than 25-years old and run on fewer than 18 miles per gallon of fuel. CARS or Car Allowance Rebate Scheme has been set up to stimulate the purchase of more fuel efficient, or greener, cars. In a statement released by the US Department of Transport, it also said the program “is designed to energize the economy”.

Two out of the three major automotive companies in the US have run into trouble in the recession-hit economy. General Motors (GM) is still in the process of selling its final sub-groups after filing for bankruptcy protection in June.  Ford, the only one of the three big US carmakers not to have gone bankrupt, Chrysler being the third, this week reported a quarterly profit of $2.3 billion.

The CARS program will end on 1 November. Analysts have yet to consider whether the car scrappage scheme launched in the UK in April has made any significant progress in boosting the car industry.