Bulletin - Clunker Program May Already Be Over!

08/30/2009 05:12 am ET | Updated May 25, 2011

Automotive News reports Thursday night:

The federal "cash for guzzlers" program reached its $1 billion funding limit unexpectedly after an avalanche of business exhausted its funds, an Obama administration official said late Thursday.

The White House was working with Congress to try to extend funding as lawmakers prepared to leave town for the month of August, according to the official, who was not authorized to speak for attribution.

Initially, congressional and industry officials signaled that the program was going to be suspended as soon as today as funding ran out. Those reports, widely reported by national news outlets including Automotive News, triggered confusion throughout the industry.

National Automobile Dealers Association spokesman Bailey Wood said earlier Thursday the organization was briefed by Department of Transportation officials on plans to suspend the program at midnight.

But later, Chuck Cyrill, another NADA spokesman, said the association had no official DOT confirmation suspending the program.


The plan appeared to be prompted by a NADA survey showing a huge backlog of unplaced dealer orders that would burden the government's computers and exhaust the budgeted funds, he said.

NADA plans to issue advice to members at 8 a.m. EDT today( Friday). Wood said.

Republican Fred Upton said he was told by Secretary of Transportation Ray LaHood earlier Thursday that the agency is accepting dealer refund applications only until midnight.

They've exhausted the money," Upton said in an interview.

But Upton, quoting LaHood, added, "He did not say any orders placed after midnight would not be honored."

Upton said the Michigan congressional delegation spoke by telephone Thursday evening and will be meeting this morning to try to find new funding for the program.

"The consensus is that this program has worked and we damn well ought to figure out how to continue it," he said.

Transportation spokesman Rae Tyson declined comment.

"Incredibly popular"

"We are working tonight to assess the situation facing what is obviously an incredibly popular program," a White House official said in an e-mail to Automotive News. "Auto dealers and consumers should have confidence that all valid CARS transactions that have taken place to date will be honored."

CARS stands for Car Allowance Rebate System, the official name for the program known popularly as cash-for-clunkers or cash-for-guzzlers.

Dealers began offering the U.S.-backed rebates of as much as $4,500 in earnest a week ago. But the Transportation Department will need additional cash after a backlog of nearly 200,000 orders threatened to jam the pipeline

The program was part of a congressional effort to revive slumping U.S. sales and further help domestic automakers, especially General Motors Co. and Chrysler Group, which have emerged from brief bankruptcies.

Sales spiked more than regulators anticipated this week after the government began logging transactions and approving rebates that indicated consumers were opting for vehicles that get significantly better gasoline mileage than the models they were trading in.

Fund sought

The administration opted to keep the program in place while it sought new money. It was not clear where the administration would find additional funding in a short period of time.

"We hope there's a will and a way to keep the program going a bit longer," GM said in a statement. "Any doubt that the program would jump-start auto sales is completely erased."

An estimated 16,000 dealers were eligible for the program and each would have to sell more than a dozen vehicles at the maximum rebate to reach the government's funding limit, according to the NADA.

U.S. Senators Dianne Feinstein of California and Susan Collins of Maine said any extension of the incentive must require greater fuel efficiency and higher reductions of auto emissions.

Congress wrestled with both issues when it established the current incentive to give U.S. manufacturers a better chance of qualifying for the program.

U.S. auto manufacturers are scheduled to report their July sales on Monday.

NADA presented the results of a dealer survey to the Transportation Department this week, Wood said.

The survey showed that there were almost 200,000 dealer transactions that had not yet been submitted for refunds to the government, he said.

Data released earlier Thursday by the government showed that dealers had submitted 22,782 deals seeking $95.9 million in refunds.

The NADA survey suggests that if the entire backlog of orders were filed with the government, its $1 billion budget would be depleted, Wood said.

I've said since the program was first announced as being funded with only $1 billion and slated to last only four months that the money would run out well before the time limit.

But I don't think anyone expected this!

Much of the opposition to the program came from the same cabal of southern senators who have import car and parts-making plants in their states, the same ones who were against bailing-out Detroit in order to destroy the UAW (no foreign auto plant in the US is unionized).

But I think even they must be embarrassed for their being against a program which has proven to be, to put it mildly, wildy popular.

Have any of you taken advantage of the clunker program? What'd you trade-in and what'd you buy new? Was it worth it?

Will you be rushing out this instant or calling dealers to see if the program is still in effect?