Bulletin - Clunker Program May Already Be Over!

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.

Backlog

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?

Follow Steve Parker on Twitter: www.twitter.com/autojourno

Comments

[EinChicago]

I think "Nobody expected it to work this well" is going to be a common refrain over the next 6-123 months. Th estimulus was almost a trillion dollars being dumped in the economy in one flush. That much money will have ahuge effect. It also takes a while to shovel that much money into the hopper before the release door is opened. We've been stuck in the "filling teh hopper" stage for the past 5 months. We're about to see the "release" stage. And all those GOPers whining how the stimulus was a bust are going to look like impatient fools.

[Steve Parker - Huffpost Blogger]

I hope you're right. If and when the banks finally start lending again, things will pick up. Clearly people will buy new cars if they get a good deal ... the success of the 'clunker' program shows there's some money out there and credit, too...
The big immediate danger to the economy is a huge round of home foreclosures affecting people who have lost their jobs in the last year. This is not the same as the 'sub-prime' problem we've gone through for the past year; these are people who had jobs and lost them. From the car dealerships closed by GM and Chrysler alone, that number is supposed to top 170,000 over the rest of this year. Scary stuff.
Steve

[lippylaroux]

I guarantee the car dealer dudes acepting these trades are taking in all sorts of pieces o' crap and they are so desperate to make a sale they will say anything the applications " Oh yeah this car was running and insured for the last year" You've got to kow that car salesmen are the most corrupt human waste in this galaxy.... They are gaming this system.... I can't wait for the stories of total junk cars dragged out of the local junk yard to be used as "running trades".........Who is monitoring this?

[Steve Parker - Huffpost Blogger]

As long as the car is under 25 years old and the owner can prove it's been registered and insured for the past year, the dealer can accept it. It's not hard to trace the VIN through DMV computers and find the truth ... the federal government is pretty good at things like that.
There will be some cases like you mention, sure. But almost every week there are busts for Medicare fraud running into the millions ... So do we end Medicare because of that? Does that make the doctors involved in the fraud corrupt human waste? Some people will always try to game the system and some will succeed.
You'll get no argument from me that some car dealers are rotten ... the main problem is that car salespeople, the people 'on the line' who meet you when you walk into a dealer, are often untrained, hired on the basis of their shoeshine and smile ... and industry-wide most receive commission-only and no benefits ... none. If dealers took care of their employees, the ones the public deals with, that'd help clean-up the industry. The National Automobile Dealers Association has been trying to develop a 'certification' program for salespeople for years, but it's tough going.
Steve

[Softnsweet]

Yea, I bet all the cars came from the same repubs that were yelling about socialism.

[EinChicago]

It's funny because it's true. I know one person who participated in the cash for clunkers. My hard right, born again christian anti-government mother in law traded in an old Montero that my college age brother in law occasionally uses for a new Prius.

[whinenot]

What, you mean the public actually likes a 'bailout program'? There is no yelling and screaming about 'government money' going to private businesses and people. How can there be no screams from the conservatives calling this a 'socialist takeover'? What a 'government program that works, that people are flocking to in massive numbers?

Oh, that' right...silly me, forgot. This is 'bailing out' citizens, with lousy cars, lousy gas milegage, lousy emissions. People have an opportunity to get into new cars. Car dealers, private business, benefit from new sales. Wow, when individual citizens get assitance from the government, apparently helping out 'private business' isn't such a bad thing. Apparently it isn't 'socialism; either.

What if a PUBLIC HEALTH CARE option was as popular with the public as this government supported 'clunker' program appears to demonstrating? Prepare for August...the conservatives know, that if the public option comes...people will flock to it, just as the are flocking to this 'government' program as well. Conservatives also know, their ideology will be significantly damaged forever if that were to pass.

If you thought terrorism-fear mongering after 911 was bad, you have seen nothing yet over the fear the GOP has, and will spew over a public option Health Care Plan.

[KillTheMessenger]

Wasn't it the citizens who bought these cars? So if you made a mistake in the past, is it my obligation to bail you out each and every time? Why? Because you like it? Get a grip.

[Steve Parker - Huffpost Blogger]

Thanks for the comment!
The citizens bought cars which got the EPA-mandated mpg at the time. Now that there are cars and trucks with (often) much-better mileage (and thus producing fewer emissions) why not make it easier for people to get into them ... while helping the auto industry at the same time? Also, newer cars are much safer for their passengers and those in vehicles those new cars might hit.
Clearly, I'm not the only one who thinks this is a good program...
Steve

[Ben6768]

Good post. There are so many good things the government could do. If only the Obama administration could look past their inner circle and perceive what the U.S. population really wants and is ready to fight for.
Cheers

[Steve Parker - Huffpost Blogger]

Thanks for the kind words. Always appreciated!
Maybe Obama does need to look beyond his inner circle --- always a good idea for any president -- but more importantly, I think, he look beyond the circle of republican senators from southeast states which have foreign car-making plants and parts-makers, too. These people have blocked every effort to help Detroit. Responding to their bosses (BMW, VW, Nissan, etc) this cabal of Detroit-haters sees the auto crisis as their chance to destroy the UAW. Of all the foreign car-making and parts-making factories in the US, NOT ONE HAS BEEN UNIONIZED.
And they want to keep it that way ...
Steve

[Steve Parker - Huffpost Blogger]

For those who are against government programs which help the people (and sometimes even industry), I say these folks should not accept their Medicare checks, then hire their own private security firm so they aren't forced to call on the 'socialistic' police system we have in this country and when there's a fire in their home ... let it burn, baby, burn. Last thing you'd want would be a GOVERNMENT EMPLOYEE coming to your home and putting out the fire, when clearly a bunch of our neighbors could do just as good a job ...and do it cheaper, too. Privatize, baby, privatize!
Steve

[Ben6768]

The people that are against government action should be prohibited from using paved roads ( these are socialist things for the public good ). To go to the supermarket, they should hike throgh the woods for 20 miles, through the poison ivy and the snakes.

[Steve Parker - Huffpost Blogger]

I agree 100%.
I always say --- those against 'socialist government programs' should hire their own police and fire departments, not accept Medicare or Social Security and live their lives without benefit of such programs. When I lived in the So Cal desert, in La Quinta, CA, a true bastion of republicanism, the people voted against adding paramedics to the local fire department (made up of fantastic women and men) --- which would have cost the average household something like $3 a month. Those folks should call their own ambulances when they get sick or have a serious accident.
We're all in this together ... some people need to finally admit that to themselves and work to make things better for everyone.
I think the conservative anti-government ideology has already been significantly damaged ... the only thing to thank George W. Bush for.
By the way --- where IS that $700 million Bush and Paulson gave to Wall Street?
Steve