Shut Out: Consumers Fuming Over Cash for Clunker Shortfall

July 31, 2009— -- Thanks to the cash for clunkers program, Kay Ling and her husband Lowell were supposed to pick up their new 2009 Ford Escape this morning. But then, just two and half hours before they set off one last time in their rusty old car, the phone rang.

The dealership was delaying the sale indefinitely because of questions about the future of the government program.

"They said they didn't want to give us our new vehicle, then have to ask for it back if the program didn't work out. By then, they would have already crushed our 1994 Dodge Dakota," Ling said. "This is so frustrating."

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Ling and thousands of other car shoppers around the country were thrown into limbo last night when the White House said the that just days after its start, the government's popular cash for clunkers program was running out of money.

Lawmakers had originally expected the program to last until Nov. 1 or when the $1 billion budget for new car sale rebates ran out. Now it's possible that the program won't even last a week.

The government has not officially suspended the program but some dealers, afraid that they won't get reimbursed by the government, have stopped making new sales. Others are moving forward, hoping that the government will still honor deals and that Congress will put more money into the program.

Click here to see if your car would have been eligible under the program.

"Quite frankly, we're planning on having our dealerships open this morning and we plan on selling," Marc Cannon, spokesman for AutoNation, the country's largest automotive retailer said. "The government did not suspend the program. They discussed it. They're looking for money right now and we have told our dealerships that we are open and taking cash for clunkers."

Cash for Clunkers a "Huge Success"

Cannon said AutoNation has said all along that $1 billion wasn't going to be enough.

"It's a huge success. Our traffic is up 36 percent in the last week," he said. "This is the best stimulus we've had. We spent $787 billion in stimulus and none of us know where it is. We spent $1 billion and look what happened. You need to get money into the hand of the consumer if you want to drive activity."

But at the Penske Automotive Group, the nation's second largest auto dealer network, no new deals are being made today, according to spokesman Anthony R. Pordon.

"We're kind of in a holding pattern -- a wait and see -- until we hear a more definitive announcement," Pordon said. "The deals we did through last night, we're going to work through those deals and put those deals through the system, but we don't intend to write any deals today until we hear anything more definitive."

"If the program is out of money, then it's out of money," he said.

CarMax, the country's largest used car dealership network which also has five new car franchises, actually suspended its participation in the program Wednesday "due to the uncertainty about the continued funding availability."

For Ling and other consumers, this is bad news.

"This program was perfect, perfect for us," Ling said, saying her old car is "pretty much close to worthless."

Thanks to the $4,500 from the government and some incentives from the dealership and Ford, the new Escape would have cost $21,400, making it a good bargain for the Batavia, N.Y. couple.

"All in all it was pretty sweet," Ling said. "I've got the check in my purse, all ready to go."

Chris Myers, of Elon, N.C., was finally ready to get rid of his gas-guzzling 1995 Jeep Grand Cherokee that got 14 miles per gallon and had spent more than its fair share of time in the mechanic's shop.

Thursday night he got in the car for what he thought would be one last drive. But a delay in some bank paperwork late at night forced him to wait one more day for his new, silver 2009 Jeep Patriot, which gets 22 mpg in the city and 28 on the highway.

Then the ground fell out from under Myers. His dealer called this morning saying that a shortfall in funding for the Cash for Clunkers program was putting his sale in jeopardy.

Feeling Shut Out of Cash for Clunkers

"I'm pretty upset right now," Myers, 26, said this morning. "I cleaned out the car. I took out my XM Radio."

Myers expected to get $4,500 from the government and another $3,500 that Chrysler was matching as an incentive. That would have brought the cost of the new car down to $10,400, or a monthly car payment of about $180.

At that point, it became economical for Myers to buy a new car with better mileage than keeping his old one alive with more repairs.

"I figured that a low monthly payment for a car under warranty was more efficient," he said.

Kimberly Paschedag, of Fairport, N.Y., was also going to pick up her new vehicle this morning when the dealer called and said to forget it.

"He told me that the program has been suspended. I, however, am reading otherwise," Paschedag said. "Now I'm out a new vehicle and they have my `clunker' sitting on their lot. I took money out of my retirement plan to pay for the new vehicle when all along it could have been earning interest. I'm mad as heck and I want some answers."

Dan Williams, of Sims, N.C., also got a call today. He had a 1 p.m. appointment to purchase a new car and trade in his 1986 Chevy S-10 Blazer.

"I had already worked the numbers with the dealer, and was approved for financing," Williams said. "I received a call Thursday night from the dealer informing me the program was being suspended and that I needed to come that night to get my deal done. I was unable to get to the dealership Thursday night to close the deal. Definitely feeling shut out."