"Cash for Clunkers" Nears End of the Road

Administration Plans Will End Popular Program's Incentives on Monday

(CBS/AP)  The Obama administration will end the popular $3 billion Cash for Clunkers program on Monday, giving car shoppers a few more days to take advantage of big government incentives.

The Transportation Department said Thursday that the government will wind down the program on Monday at 8 p.m. EDT. Car buyers can receive rebates of $3,500 or $4,500 for trading in older vehicles for new, more fuel-efficient models.

Transportation Secretary Ray LaHood said the program has been "a lifeline to the automobile industry, jump starting a major sector of the economy and putting people back to work." He said the department was "working toward an orderly wind down of this very popular program."

The White House has touted the program's success in providing a targeted boost to the sluggish economy since its inception in late July. Through Thursday, auto dealers have made deals worth $1.9 billion and the incentives have generated more than 457,000 vehicle sales.

But the administration needed to put a halt to the program to avoid surpassing the $3 billion funding level. Consumers were on pace to exhaust the program's coffers in early September and dealers have complained about long delays in getting reimbursed for the car incentives.

John McEleney, chairman of the National Automobile Dealers Association, said he remained concerned that so few dealers had been reimbursed for Clunker deals. But he said the Monday deadline should give dealers time to get their paperwork in order.

"I think if we can get a clean cutoff Monday and get everything processed by then, it will have been a pretty darned successful program," he said.

But Mike Mahalak, who runs a Dodge, Chrysler and Jeep dealership in Winter Haven, Fla., said the Monday end date could lead to a similar rush that nearly crippled the federal government's computer systems that were set up to handle claims.

"That Web site will lock up again once everyone is cramming it again on Monday," Mahalak said. The administration has said it expanded the capacity of the computer network in an effort to improve the process for dealers.

The Transportation Department said they have reviewed nearly 40 percent of the transactions and have already paid out $145 million to dealers. Obama officials said there are no plans to seek additional funding.

Applications for rebates will not be accepted after the Monday deadline, administration officials said, and dealers should not make additional sales without receiving all the necessary paperwork from their customers. Dealers will be able to resubmit rejected applications after the deadline.

The Transportation Department cautioned dealers about making sales this weekend, advising them to make sales only when the buyer's paperwork is clearly in order and can be submitted immediately for repayment.

President Barack Obama said in an interview Thursday that the program has been "successful beyond anybody's imagination" but dealers were overwhelmed by the response of consumers. He pledged that dealers "will get their money." The administration has said it has tripled the number of staffers sorting through the dealer paperwork.

Some dealers are already frustrated, reports CBS News correspondent Ben Tracy. Dealers have to front the money for the rebates - sometimes to the tune of hundreds of thousands of dollars - and the government has been slow to pay them back.

Dealers have said they face a risk of not being reimbursed but LaHood has pledged that dealers will be paid.

"We do not know how many deals are in the pipeline. We don't know how many dollars are left in the program at this very moment," said Ted Smith, president of the Florida Automobile Dealers Association. "That's fundamental to the health of the dealerships that are participating. If you run out of money before you run out of deals, that's not a good situation."

On Thursday, both Chrysler and General Motors said they would begin providing cash advances to dealers to help cover any cash shortfalls related to the program. The automakers said they would provide the advances for up to 30 days to dealers who have already completed a sale and that 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 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."

Dealer say the delays have led to a cash crunch. They typically borrow money to put new cars on their lots and must repay those loans within a few days of a sale.

Some dealers are no longer participating in the Clunker program. The Greater New York Automobile Dealers Association, which represents dealerships in the New York metro area, said about half its 425 members had left the program because they cannot afford to offer more rebates.

Still, the program provided at least a temporary jolt for automakers.

GM announced plans to rehire more than 1,300 workers and automakers have been paying overtime to boost production. Hyundai recalled 3,000 workers in Alabama.

"At a time of great economic distress, cash for clunkers has stimulated increased production by domestic automakers, putting thousands of idled workers back on the job," said Rep. John Dingell, D-Mich.

The government's online reimbursement system was flooded with requests shortly after the program began in late July, overwhelming the computer system and staff set up to process the deals. That led to big delays for dealers trying to file the paperwork they needed to get paid back for the rebates.

LaHood said some of the submitted paperwork has been incomplete or inaccurate, which contributed to delays. He acknowledged the Transportation Department did not have enough people to process the paperwork but said DOT was ramping up staff.

[elz523]

OK folks, this is not killing the used care shops. In 2007 16 million new cars were sold. This ear it will be less than 10 million. With the 500,000 sold by new car dealers under the Cash for Clunkers program there will still be less than 10 million cars sold. I'll do the math for you, that is still 6 million fewer new cars sold than were sold 2 years ago. If the used car dealers managed to make it in 2007 with the demand for new cars then, there is no reason they shouldn't be able to make it now when, even with the increase from Cash for Clunkers, there will be 6 million fewer new cars sold.

Don't let the facts get in your way fella's.

[elz523]

I got a Cash for Clunkers deal trading in my son's car for a new one and giving him my old car. My dealer was complaining about the program and actually told me that Rush Limbaugh said that the dealers should not be selling cars under the program. His business had sold 110 vehicles. Mine was one of the first. He also complained about reading the thirty five pages of the regulations.

I told him that he shouldn't be listening to Rush Limbaugh and that no one was holding a gun to his head to sell cars under the program. I told him that I read both the regulation and the law and that I thought someone on his staff should certainly be capable of doing so. There were only four requirements to the program and the paperwork was, in my humble opinion, minimal and logical. I told him that the government set this up in one month, at the request of both the auto industry and congress and because of that things would not be perfect, it takes time to ramp the processing up.

I was very unimpressed with the auto dealers operations. I still bought the car though because it was a great deal with all of the incentives.

I have to say that after hearing the complaints about reading 35 pages of regulation and all the complaints by Republican congressmen about reading 1200 pages of healthcare legislation, I think the political discourse in our country would be vastly improved if we just got the folks on the right some reading lessons.

[underdogus09]

Governments cannot create but merely redirect. When the government spends, the money has to come from somewhere. If the government doesn't have a surplus, then it must come from taxes. If taxes don't go up, then it must come from increased borrowing. If lender won't lend, then it must come from the printing press, which is where all these bailouts are headed. But each additional dollar printed diminishes the value those already in circulation. Something cannot be effortlessly created from nothing..

[underdogus09]

Printing money is merely taxation in another form. Rather than robbing citizens of their money, government robs their money of its purchasing power......

[kansas1946]

I am really sorry this see this program end. It is one of the few government programs that I can remember that directly and quickly gave a helping hand to the middle class. We were going to participate because my daughter, who really can't afford a new car, has an old Ford Explorer, but we seriously couldn't find a car to trade for. All of the lower end models were gone and the only thing left were very expensive models. This was a cheap..cheap..cheap, program that helped a lot of people and I think it should be extended. Three billion is nothing. We just sent 17 billion to one of the African countries to try and combat abuse and rape of women there. A noble cause indeed, but why is it always too expensive to help middle class America, the class that pays the lions share of taxes in this country.

[djpompea]

Cash for Clunkers? What a misnomer - it's cash for carmakers. And the clunkers are cars that a lot of us would like to have. The real clunkers and their owners can't afford to buy new cars. A reliable middle-aged car would do just fine. I saw a guy with a 77 Caprice at the gas station - with dents, different colored fenders, and about 10 mpg - his car doesn't qualify because it is too old. (And I'd guess he can't afford a new car, even with a $4500 credit.) I'll bet he'd like to get a 90's car that has air, air bags, front wheel drive, ABS brakes, better reliability and probably better mpg, too. But, NO. Our wise Congress has made sure that the trade-ins are destroyed. So, the clunkers stay on the road. The middle class gets new cars. We all get stuck with the bill.

[hamiltoningrate]

CBS: very interesting report. thank you for a great informative piece.

[pensacola8-2009]

435,000 cars at $16,000 per car and 6% sales tax translates to well over 417 million tax dollars for county and city governments across the country. The figure is more likely to be higher.

Many didn't like the Cash for Clunkers, but it did help governments that depended on a steady flow of car sales, car makers, car buyers, car sellers and reduces the nations oil appetite significantly.

More wealth was circulated in this form of stimulus than many of the others, albeit it won't be sustained.

Lets see $3 Billion outlay, and at least $417 million came back from sales taxes. Workers actually working received the benefit, instead of through unemployment benefit.....not bad!

[thgdriver]

Can't you bozo's out there see how many used car lots are closing up shop. What about the sales people, clean up and mechanics laid off because sales are down? For every new car dealership there is probably 6 used car lots. Who is gonna pay 12,000 for a nice clean used car when you can get a new one for 10,000? Nice going Nobama!

Just asking, all you folks that work, sell or make parts for so called clunkers, do you still have your Nobama/Biden stickers on your bumpers? LMAO!!

[thgdriver]

This program did nothing for the millions of used car lots that don't sell new cars. Who got rich? Probably only the repo man come next year.

30% of folks drive clunkers because of a lot of different reasons, the other 70% drive them because it's all they can afford. Salespeople are paid a commission on what they sell or they don't eat or pay their own mortgage. Believe you me, they will get deadbeats into new cars they can't pay for.

Come next year they won't even have a clunker to drive to work and lose their jobs to boot. Get ready middle class to pay for your neighbors car. Actually, what difference does it make ,your already paying for the house he could not afford thanks to Nobama socialism.

[sjc_1]

The house that they could not afford was due to the Bush's "Ownership Society" where everyone and anyone could buy a home. Look up the term and you will see it talked about when all those bad loans were being made. Do not babble about socialism or anything else that you know nothing about...which is pretty much everything.

[debinok1]

GM announced that, due to the success of the 'Cash for Clunkers' incentive, they are stepping up production by 60,000 vehicles and have called thousands of layed-off workers back to work.


Once "cash for clunkers" has ended those cars will be cancelled and those employees will be laid off AGAIN. Sales will NOT continue without the program, without the program there will be no NEED for 60,000 NEW CARS and no NEED for those thousands of workers.

We had 567,000 NEW UNEMPLOYMENT claims last week, how many of these NEW CARS that have been sold now belong to the NEW UNEMPLOYED who can NO LONGER afford the payments. We are still losing JOBS, without JOBS people cannot SPEND. We are NOWHERE NEAR the end of this recession/depression, not by a long shot. Especially NOT when 2/3 of our economy is supported by CONSUMER SPENDING, and our TOTAL UNEMPLOYMENT is almost 20% and STILL CLIMBING.

[sjc_1]

"belong to the NEW UNEMPLOYED"

You think anyone is going to make a car loan to a person that can not make the payments? I seriously doubt that.
We should revisit your statements in 6 months and see if anything you say comes true. You need to be held accountable.

[SusanStoHelit]

A wonderful success!

This was always a temporary program, and did great, exactly what it was supposed to do.

I find it hysterical to see the same group of people who were denigrating the program as a rip off for the car owners, that no one would actually use, now griping because the program was too successful.

We got a bunch of gas guzzlers off the road, stimulated the economy, helped automakers, and helped a bunch of people into new cars. All positive.

[bluecollarjoe]

The program was just too popular and far more than expected made a run on the dealerships. You cranks would have complained if the government had hired extra workers BEFORE the rush. So the dealers' claims are backlogged. They have set a deadline to insure that all dealers will get paid. You just can't stand the idea that something Obama did has worked so well can you?

[wdh3007]

This was another dead lame duck idea from our current president & adminiastration that didn't do anything but help foreign auto makers overseas and maybe junk yards in certain parts of the country.

[specialty8]

Another great program for the tax payers to pay for brought to you by President Pelosi, VP Reid, Geithner, better known as "Turbo Timmy", back door Barney, and side kick Obama. The same group that is bringing you health care. Makes you feel real good about it now doesn't it?

[seafang]

That ain't the half of it. All of those cshed in clunkers have to be crushed; so it is cash and crush for clunkers. OOoops! Suddenly there are fewer trade in clunkers available for the used car market; the Used car dealers just got screwed by Obamacrush; and now those poor folks who could only afford to buy a clunker in the first place, are in a jam, because the lid has been blown off the price of used acrs; due to all those crushers.

Yeah I know it isn't what they expected to happen; but pretty soon they are going to roll out their clunker medicine program; and you can bet a lot of you folks are going to get crushed by that too.

Yeah even Obama compared his Mediclunker program to the US Poat Office; and you know how well that works.

[Benton09]

After 'Cash for Clunkers', next is 'Brains for Birthers' and 'Grave Plots for Death Pactsters', also 'Millions for Murderous Contractors that change their name to Xe' and an education for Sarah Palin is last on the list, since elementary school has not started yet!

[wjss75606]

Hey I got my $3500 trade in so I don't care. Tree fell on the old truck, but it was still drivable, insured etc. Got totaled money from insurance company for damages & gov't money for trade in. This is the only benefit middle class America will get from this admin. I also agree with some of the other posters, why are they ramping up production? Sales are going to drop as soon as this deal drys up.

[DaVicar5]

SO what am I supposed to do now? Keep driving my clunker, supporting terrorist Oil exporting countries and destroying the Ozone layer and feeding El Ninyo?

Thanks Mister President . . . another BROKEN PROMISE!

[bobnjersey]

[SO what am I supposed to do now? Keep driving my clunker, supporting terrorist Oil exporting countries and destroying the Ozone layer and feeding El Ninyo? Thanks Mister President . . . another BROKEN PROMISE! ]

why don't you do what you tell everyone else they should be doing ... take responsibility for your own issues?

do what's good for you ... blame the adverse results on everyone else ... and claim that if your view was forwarded all would be just fine.

as long as you believe your drivel ... all will be ok.

[tmittelstaed]

No you can go out this weekend and trade in your clunker, that's why this news story exists at all.

[nubiangent09]

How can you neo-cons complain about the government running health care but not complain about the 250-500 billion it spends running the military, and other forms socialism you claim is socialism. You people are flat out hypocrites.