Clunkers program hits bump

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WASHINGTON --- The government plans to suspend its popular "cash for clunkers" program amid concerns it could quickly use up the $1 billion in rebates for new car purchases, congressional officials said Thursday.

The Transportation Department called lawmakers' offices to alert them to the decision to suspend the program at midnight Thursday. The program offers owners of old cars and trucks $3,500 or $4,500 toward a new, more fuel-efficient vehicle.

The congressional officials spoke on condition of anonymity because they were not authorized to speak publicly.

A White House official said later that officials were assessing the situation facing the popular program, but auto dealers and consumers should have confidence that transactions under the program that already have taken place would be honored.

Rae Tyson, a spokesman for the National Highway Traffic Safety Administration, which administers the program, declined comment.

Congress last month approved the Car Allowance Rebate System program, known as CARS, to boost auto sales and remove some inefficient cars and trucks from the roads. The program kicked off last Friday and was heavily publicized by car companies and auto dealers.

Through late Wednesday, 22,782 vehicles had been purchased through the program and nearly $96 million had been spent. But dealers raised concerns about large backlogs in the processing of the deals in the government system, prompting the suspension.

A survey of 2,000 dealers by the National Automobile Dealers Association found about 25,000 deals had not yet been approved by NHTSA, or nearly 13 trades per store. It raised concerns that with about 23,000 dealers taking part in the program, auto dealers might already have surpassed the 250,000 vehicle sales funded by the $1 billion program.

"There's a significant backlog of 'cash for clunkers' deals that make us question how much funding is still available in the program," said Bailey Wood, a spokesman for the dealers association.

Even before the suspension, some in Congress were seeking more money for the auto sales stimulus. Rep. Candice Miller, R-Mich., wrote in a letter to House leaders on Wednesday requesting additional funding for the program.

"This is simply the most stimulative $1 billion the federal government has spent during the entire economic downturn," Ms. Miller said Thursday. "The federal government must come up with more money, immediately, to keep this program going."

THE PROGRAM: The federal Car Allowance Rebate System offered rebates of $3,500 to $4,500 for car shoppers who scrapped their old vehicles to buy ones with better gas mileage. The program, which began last Friday, was expected to run through Nov. 1 or until the $1 billion stimulus ran out.

THE RESPONSE: Through late Wednesday, 22,782 vehicles had been purchased and nearly $96 million had been spent.

THE PROBLEM: A survey of 2,000 dealers by the National Automobile Dealers Association found about 25,000 deals not yet approved by National Highway Traffic Safety Administration. With 23,005 dealers asking to participate, auto dealers might have already arranged the sale of more than the 250,000 vehicles that federal officials expected the plan to generate.

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No_Longer_Amazed 07/31/09 - 08:07 am
A similar program in England

A similar program in England went 'belly up' when the stimulus was used to buy foreign cars.... and we want to emulate the UK's National Health Service ??????

Dan White 07/31/09 - 12:35 pm
And the federal government

And the federal government wants to take over our health care??? Frightening!

silent_minority 07/31/09 - 12:36 pm
What also bothers me is what

What also bothers me is what they do with your 'clunker' - they destroy it!

So let's see - we have a stimulus program (using our tax dollars)that incentivizes people to trade in their perfectly good car (that's probably paid for) so that they can go deeper into debt for a brand new car, and then destroy the trade in so that nobody else can repurchase an affordable used vehicle!?

Another brilliant program from the administration of 'change'...

TakeAstand 07/31/09 - 02:28 pm
They just approved 2 million

They just approved 2 million more for this stupid waste of money and cars program!!!!!!! geesh 4 more years of this crap.... we should be afraid.... very afraid!!!! lol

lowellbrown 07/31/09 - 02:41 pm
Such weeping, wailing and

Such weeping, wailing and gnashing of teeth about a program that ran out of funding because it was too successful. The House just voted 316 to 109, with significant Republican support, to revive the program with an additional $2 billion. There will be more debate in the Senate because some senators want to increase the fuel-efficiency requirements, but the program will be extended one way or another. Maybe I should whine because nobody is offering a rebate for a beat-up old rice rocket that still gets 30 mpg. On the other hand, THAT'S a keeper.

jaydill 07/31/09 - 05:10 pm
yeah. lets trade our paid for

yeah. lets trade our paid for car in, get in debt for a new car, three months later cannot afford the payments and these new cars repossesed, cannot get to work now and loose their jobs, not [filtered word]. we are heading into a bigger downturn and why doesn't somebody see this?

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