Auto ‘Clunkers’ Offer in Doubt After Going Through $1 Billion

July 31 (Bloomberg) -- The U.S. government’s $1 billion“cash for clunkers” program to spur new car sales ran through the money six days after it began, Senator DebbieStabenow said.
Stabenow, a Michigan Democrat, and other lawmakers calledfor an infusion of taxpayer money to subsidize more new-vehiclepurchases in the effort to revive dealerships and automakerswhile getting older, less fuel-efficient vehicles off the road.
“It is amazing that ‘cash for clunkers’ would be thissuccessful this quickly,” said Stabenow in an e-mailedstatement yesterday. “I urge Congress and the administrationto provide additional funding.”
Named the Car Allowance Rebate System, the program providescredits of as much as $4,500 for the purchase of a new car whenturning in an older vehicle to be scrapped. Lawmakers hadexpected the program to generate about 250,000 vehicle sales andto have enough money to last until about Nov. 1.
“Any doubt that the CARS program would jump-start autosales is completely erased,” said Greg Martin, a General MotorsCo. spokesman. “More than 200,000 cleaner, more fuel-efficientcars are on the road and a vital industry gets a needed boost.We hope there’s a will and way to keep the CARS program going alittle bit longer.”
Officials at the White House and the TransportationDepartment declined to comment on the program’s status. A WhiteHouse official, who asked not to be identified because noannouncement had been made, said the administration wasassessing the situation facing what had turned out to be anoverwhelmingly popular program.
Transactions Honored
All valid transactions that have taken place so far underthe clunkers program will be honored, the official said.
The Transportation Department had said this week that themoney wasn’t running out.
“When we get close, we will start alerting dealers so theydon’t get caught with a deal in the pipeline,” said Rae Tyson,a department spokesman, in an interview July 28. “We’re notgoing to leave them hanging. We’re not going to run out of moneyin a couple days.”
The administration’s reports on clunkers applications fromdealers didn’t indicate that the funds were near exhaustion. TheNational Highway Traffic Safety Administration, which is runningthe program, said yesterday that 22,782 vehicles worth $95.9million had been sold.
Representatives Sander Levin of Michigan and Betty Sutton of Ohio, both Democrats, said this week that they may try toextend the program if the initial allotment was spent swiftly.
‘Maybe Too Successful’
“This was a very successful program, maybe even toosuccessful,” Senator Charles Schumer, a New York Democrat, saidyesterday in a statement. “The program should continue, butperhaps with a tune-up so that we get the most stimulus,conservation and efficiency for the buck.”
Patrick McGowan, who with his wife bought a Hyundai MotorCo. Elantra on July 28 under the program, said he wonderswhether the dealership in Benton Harbor, Michigan, where theypurchased the car will be left without government reimbursement.
“I asked them when I was there what happens if thegovernment runs out of money before the paperwork clears,” saidMcGowan, 37, an editor for a Catholic publication, in a phoneinterview yesterday. “They didn’t really know.”
McGowan and his wife Annie Vorhes McGowan, a University ofNotre Dame Ph.D. student, wouldn’t have traded in their 1998Isuzu Motors Ltd. Rodeo for a new car if it weren’t for the$4,500 rebate they got through the clunkers program and theadditional $2,000 rebate from Hyundai, he said.
140,000 Miles
“Our car had 140,000 miles on it,” he said. “We in amillion years weren’t going to buy a new car.”
Dealers, who are reimbursed by the federal government forthe clunkers rebates they give consumers, are required toimmediately junk the trade-in cars under the program bydisabling the engines.
Jill Zuckman, a Transportation Department spokeswoman,declined to comment. Tom Gavin, a spokesman for the Office ofManagement and Budget, the White House branch that overseesgovernment spending, didn’t respond to requests for comment.
Mike Moran, a spokesman for Ford Motor Co., said in an e-mail that he had no immediate comment.
“We had a lot of good feedback from dealers as far as howmuch traffic they had as a result of this program,” said GregThome, a spokesman for Toyota Motor Corp. “Everybody issurprised that the popularity was that immediate.”
Charles Cyrill, a spokesman for the National AutomobileDealers Association, said, “If the program is indeed suspended,NADA will continue to work with the Department of Transportationto emphasize the importance that every dealer is reimbursed fora valid deal.”
President Barack Obama signed the clunkers program into lawJune 24 after Congress approved it the previous week as part oflegislation to finance the Iraq and Afghanistan wars.