johnnymk

http://www.nytimes.com/2009/07/31/bu..._r=1&th&emc=th

WASHINGTON — New-car shoppers appear to have already snapped up all the $1 billion that Congress appropriated for the “cash for clunkers” program, leading the Transportation Department to tell auto dealers Thursday night to stop offering the rebates.

But a White House official said the program had not been suspended, creating confusion about its status. The program offers $3,500 to $4,500 for people who trade in an old car for a new one with higher fuel economy.

In a statement issued Thursday evening, Robert Gibbs, the White House press secretary, said: “We are working tonight to assess the situation facing what is obviously an incredibly popular program. Auto dealers and consumers should have confidence that all valid CARS transactions that have taken place to date will be honored.”

The program, formally known as the Car Allowance Rebate System, was scheduled to be offered until Nov. 1, or as long as the money was available. But the program was so successful that it has exhausted all the money allocated within the first week. Dealers have submitted applications on behalf of consumers seeking rebates on about a quarter-million vehicles.

The National Automobile Dealers Association surveyed its members in recent days and warned the Transportation Department on Thursday that it had a very large backlog of applications, said Bailey Wood, a spokesman for the association.

Late in the day, the group said the Transportation Department had responded by telling it to stop taking applications at midnight. The government and the dealers were concerned that buyers would close trade-in deals to buy new cars assuming they had a big rebate coming only to discover later that money was not available.

The dealers’ group said late Thursday night that it had not heard about the White House policy reversing the decision. Mr. Wood said that his group would ask Congress and the White House to add money to the plan.

Transportation Secretary Ray LaHood has already been making calls to members of Congress, telling them about the situation. The Michigan delegation was planning a meeting Friday morning to discuss the situation, a Congressional aide said.

On Thursday evening, the government Web site describing the program, www.cars.gov, still showed a chart shaped like a fuel gauge that indicated $779 million was available for trade-ins of cars and light trucks. Earlier Thursday, the Transportation Department issued a news release that said that applications for fewer than 23,000 vehicles had been submitted as of Wednesday, with a rebate value of just under $100 million.

The Transportation Department had begun accepting applications for the rebates on Monday, when rules putting the program in place took effect. But car dealers had been accumulating the applications since July 1, when Congress put the law into effect.

The program had two goals: aiding the ailing car industry and improving fuel economy of the vehicles on the road.

Cars submitted under the program were to be junked. They had to be less than 25 years old and have a fuel economy, as rated by the window sticker, of 18 miles a gallon or less.

The size of the rebate depended on the fuel economy of the replacement vehicle. Consumers were also supposed to receive the scrap value of their trade-ins.

From the dealers’ point of view, the program was a resounding success.

“Two hundred and fifty thousand vehicles in four weeks?” Mr. Wood said. “One word comes out of my mouth: Wow.”

As word spread unofficially on Thursday night, car dealers were suddenly unsure of what to tell would-be buyers.

A Ford dealership in Paramus, N.J., did not know of the apparent suspension until a reporter called seeking comment.

Other dealers said they had no idea what the status of the program was, or whether the deals that they had already signed would be honored by the government. Some said they were notified by e-mail message by fellow dealers.

The dealers’ association, however, had been warning that the money would go quickly.

Under the program, a buyer who picked a car with a mileage improvement of more than four miles per gallon but less than 10 were eligible for $3,500; a buyer whose new vehicle was rated 10 miles per gallon or better than the old one was eligible for $4,500.

Until the cash-for-clunkers program began, the auto industry had been on track for annual sales of about 10 million units, down from the peak of about 16 million units a year.

attgig

http://www.bloomberg.com/apps/news?p...d=aZQsGa9XbZGY

House Votes to Add $2 Billion to ‘Cash for Clunkers’ (Update1)

By Angela Greiling Keane

July 31 (Bloomberg) -- The U.S. House approved an emergency measure to add $2 billion to the “cash for clunkers” automobile purchase program after a burst of demand exhausted most of the initial $1 billion in less than a week.

President Barack Obama said he was “very pleased with the progress the House has made.” The administration is “working with Congress to ensure the program can continue,” he told reporters at the White House.

The Senate will try to act on the bill next week, said Jim Manley, a spokesman for Majority Leader Harry Reid.

Named the Car Allowance Rebate System, the program provides credits of as much as $4,500 for the purchase of a new car when turning in an older vehicle to be scrapped. Lawmakers had expected the first $1 billion to generate about 250,000 vehicle sales and last until about Nov. 1.

“Consumers have spoken with their wallets, and are saying they like this program,” said Representative David Obey of Wisconsin, the chairman of the Appropriations Committee.

The House voted 316-109 to transfer money to the program from an Energy Department fund for loans to innovative energy projects that wasn’t to be distributed until next year.

The auto program will continue without interruption, White House press secretary Robert Gibbs told reporters today.

Buying This Weekend

“If you were planning on going to buy a car this weekend, using this program, this program continues to run,” Gibbs said. “If you meet the requirements of the program, the certificates will be honored.”

Some Republicans, such as Representative Jeff Flake, of Arizona, said the program is being administered badly and picks economic winners and losers.

“Why are we deciding to aid this sector and not another?” Flake said during the House debate.

Demand kindled by the clunkers program may push U.S. auto sales to a 2009 high in July, possibly signaling a bottom in the market’s worst slump since at least 1976. Sales have run at a seasonally adjusted annual rate of fewer than 10 million units since December. That pace trails last year’s total of 13.2 million and the 16.8 million average from 2000 through 2007.

The Michigan congressional delegation led today’s efforts for action, saying they had the Obama administration’s support.

“The administration worked overnight literally to identify a source for these funds,” Senator Carl Levin, a Michigan Democrat, said in an interview. “They are not only on board, they are enthusiastically leading this effort.”

House Recess

The House approved the infusion of funds before leaving for its August break after today’s session. The Senate is scheduled to be in session next week.

The effort to revive the program may face demand from senators that it produce a greater improvement in energy efficiency than is now required.

“Any extension of the ‘cash for clunkers’ program must go further in advancing the goals of better fuel efficiency and greater emissions reductions,” Senators Dianne Feinstein, a California Democrat, and Susan Collins, a Maine Republican, said in a joint statement. “We will not support any bill that does not meet these goals.”

The program was designed to subsidize more new-vehicle purchases in the effort to revive dealerships and automakers while getting older, less fuel-efficient vehicles off the road. Much of the money was committed within six days after the program began.

Doubt Erased

“Any doubt that the CARS program would jump-start auto sales is completely erased,” said Greg Martin, a General Motors Co. spokesman. “More than 200,000 cleaner, more fuel-efficient cars 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 a little bit longer.”

The Transportation Department had said this week that the money wasn’t running out.

“When we get close, we will start alerting dealers so they don’t get caught with a deal in the pipeline,” said Rae Tyson, a department spokesman, in an interview July 28. “We’re not going to leave them hanging. We’re not going to run out of money in a couple days.”

The administration’s reports on clunkers applications from dealers didn’t indicate that the funds were almost gone. The National Highway Traffic Safety Administration, which is running the program, said yesterday that 22,782 vehicles worth $95.9 million had been sold.

Dealers Association

Yesterday, the National Automobile Dealers Association, which represents about 19,700 new car and truck dealers, came to the Michigan delegation with concerns about the $1 billion being used up, with 40,000 transactions completed and about 200,000 in the pipeline, according to Senator Debbie Stabenow, a Democrat from the state. The McLean, Virginia-based association worked with the delegation on the measure to keep the program going, she said.

“Until further definitive guidance on the availability of funding is provided by the administration, dealers who accept additional ‘clunkers’ deals may face a risk that they will not be reimbursed,” John McEleney, the association’s chairman, said today in a statement.

Dealers are “in limbo” on the future of the clunker discounts, said Hart Oshman, general manager of Lone Star Ford in Houston.

“We’ve done 15 of them ourselves,” Oshman said today in a phone interview. “I want them to keep the program going as long as I’m going to be able to get my money from the government. That’s the one thing that concerns me.”

Open to 3 A.M.

Tamara Darvish, who owns 18 dealerships in the Washington area, kept her Toyota dealership in Silver Spring, Maryland, open until 3 a.m. today delivering cars under the program after reports it would end at midnight.

“Customers were alarmed by the deadline and fearing they were going to be too late,” Darvish said today in a phone interview.

Dealers, who are reimbursed by the federal government for the clunkers rebates they give consumers, are required to immediately junk the trade-in cars under the program by disabling the engines.

Obama signed the clunkers program into law June 24 after Congress approved it the previous week as part of legislation to finance the Iraq and Afghanistan wars.

To contact the reporters on this story: Angela Greiling Keane in Washington at agreilingkea@bloomberg.net; Roger Runningen in Washington at rrunningen@bloomberg.net

Last Updated: July 31, 2009 13:43 EDT

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johnnymk

I wonder how they disable the engines...by urinating in the gas tank after drinking Red Bull?

LPMiller

silca/sand/water mixture, hardens under heat, engine seizes up and dies in about 2-5 minutes. Bunch of videos on youtube about it.

__________________
lpmiller
Chief News Editor
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Once Shot A Man For Snoring Too Loud
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"The strength to change what I can, the inability to accept what I can't, and the incapacity to tell the difference." - Calvin and Hobbes

Daedalus

+1 Just saw this video yesterday. Sodium silicate used in this video. I know they're "clunkers" but I can't believe we can't find a better use for nearly a million vehicles than as rolling hunks of scrap metal.

Markel

Nothing cures a billion dollar plan that's gone broke like a couple of billion more.

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stay low... keep moving...

johnnymk

Stimulating to watch it go down the drain, isn't it?

attgig

that's sad to see.

Houdini

Agree. And not all of the "clunkers" necessarily get poor mpg.

I never really understood the purpose of this...subsidizing people's new cars if they destroy their old ones. Sure, the mpg might be a little higher, but to make up the difference in expense will require a lot of driving. Do I really want my tax money going to this? Does anyone? I can think of far more productive things I could do with my money to better the community, but making people think they're getting a big check from the government in exchange for a car that's worth less is a nice way to win votes.

Didn't someone once advise us to ask not what our country can do for us? I'm sick of even these small examples of expanding government, skyrocketing debt, and as most economists will tell you, the coming (actually already here) unemployment spike, which will simply get higher as higher taxes are imposed on those who employ others. It's all about power.

H

LPMiller

Those cars are recycled, they are just seizing the engines to insure the program actually works. While a small percent of cars are still plenty fine, reports from the dealers and the government is that most of those cars are in fact, junk.

Also, extra 2 billion they want is money already spent from the stimulus package. Based on the July sales numbers for the auto industry, it's clearly working to increase sales, so might as well move that money to something we know works now.