After a lengthy debate, it's looking likely that a Cash-for-Clunkers bill will be passed by Congress this Summer. And a new study says it could yield significant new sales for struggling automakers.

One of the first bits of business awaiting Washington lawmakers, after their week-long Memorial Day break, is the cash-for-clunkers debate.  Hoping to kick-start the U.S. market, several proposed measures would offer big cash incentives to trade in older vehicles for newer, more fuel-efficient ones.

Whether such a bill will pass – and in what form – remains to be seen.  But with imilar laws generating big returns in markets like Germany and the U.K., there’s growing support that could translate into votes.

Unfortunately the U.S. versions, unlike the U.K., require no contribution from  the automakers who would benefit the most from it.

Will a cash-for-clunkers bill work here?  A new study from the Oregon-based research firm, CNW Marketing, suggests it could prove extremely effective, depending on how inclusive a final measure is defined.

“If the federal government can enact a cash-for-clunker program quickly,” writes CNW President Art Spinella, “if could mean at least a quarter million additional car sales in ’09, and as many as 1.2 million if the effort catches the fancy of all those who are even somewhat interested in ridding themselves of an older vehicle.”

CNW research suggests there are as many as 257 million vehicles in the U.S. automotive pool that could qualify for a cash-for-clunkers payout, depending upon what lawmakers finally agree on.  Of that number, at least 30% of those vehicles’ owners say they’re “very” or at least “somewhat” interested in taking advantage of a cash-for-clunkers windfall.

“Right now, I’m waiting to see what happens,” says Roger Carnelli, a suburban Detroit attorney, who says he was planning to give his son, about to graduate from college, one of the family’s older cars. If a clunkers bill is passed, Carnelli says he’d trade the old heap in and give his son something new.

The average age of those who say they are somewhat or very interested in taking advantage of a cash-for-clunkers, or C4C, bill, runs north of 12 years, according to CNW data.  More than half of their owners still have some debt on the vehicles, so federal vouchers would go towards offsetting existing loans.  Another 70 million potential buyers would simply use the federal largesse to offset a new vehicle’s purchase price.

In reality, the pool of potential buyers is a lot smaller, especially when considering the current, tight credit market.  CNW forecasts there are more like 18 million potential clunker owners who could actually qualify for new car loans.  Parsing the data further, Spinella believes a bit less than 1.3 million potential customers would by “very likely” to take advantage of a C4C program.

“The question,” he cautions, is “how long before those 1.3 million potential C4C users come to market?”

Quality improvements, over the last decade, are actually working against the auto industry, analysts warn, as vehicles are less likely to be breaking down catastrophically, so many potential buyers could shop at their leisure, especially if a clunkers bill isn’t limited to a very short timeframe.

CNW research suggests that with the oldest vehicles, on average, Asians and Hispanics have the oldest vehicles on the road and are “among those who would use the program soonest.”

Since the various clunkers bills under debate would all require trading in on more fuel-efficient models, that could impact what – or if – buyers trade in.  Among pickup owners, many would consider another truck, but would opt for diesel power.  But as much as 10% of the pickup owners might trade in on a new hybrid.

Ironically, CWN data warn that the impact of a clunkers bill might not be as positive as some would expect.  While one goal of such a program would be to increase automotive sales, another target is reducing overall fuel consumption.  But Spinella notes that “new cars are driven significantly more than old ones,” often because of concerns about reliability.

So, those folks who trade in unreliable old vehicles may wind up driving their reliable new ones far more than before, offsetting any improvement in the vehicle’s rated fuel economy.