Administration discussing how to wind down clunkers
WASHINGTON -- The Obama administration is developing plans to wind down the popular cash for clunkers program and could announce by Friday when the incentives will no longer be available.
Transportation Secretary Ray LaHood said Wednesday the department would announce within 48 hours how it intends to discontinue the program that offers car buyers rebates of $3,500 or $4,500 for trading in older vehicles for new, more fuel-efficient models. Department officials met with car dealer trade groups on Wednesday to discuss how the program will eventually end and respond to complaints over a backlog of rebate payments to dealers.
Through early Wednesday, auto dealers have made deals worth $1.81 billion and are on pace to exhaust the program's $3 billion in funds in early September. The incentives have generated more than 435,000 vehicle sales but dealers want a clear plan on when the rebates will no longer be available so they don't end up on the hook for any of the incentives.
"We want to make sure that dealers know when we're getting close" to running out of the money that was allocated for the program, LaHood told reporters. LaHood said he recognized that "dealers are frustrated. They're going to get their money."
On Thursday, General Motors said it would begin providing cash advances to its dealers to help cover any cash shortfalls related to the program. The automaker said it will provide the advances for up to 30 days for dealers who have already completed a sale and they will be available as long as the program remains in effect.
The National Automobile Dealers Association said its trade group met with Transportation officials to discuss dealer concerns about reimbursement delays and ways of fixing the problems. NADA spokesman Charles Cyrill said the association "stressed the importance of addressing — as soon as possible — how the program will end, including the possible suspension of the program."
Dealers have complained of delays in getting their reimbursements approved, causing a cash crunch at their dealerships. Dealers typically borrow money to put new cars on their lots and must repay those loans within a few days of a sale.
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