Customers Scramble for Cash for Clunkers

cash for clunkers generic
cash for clunkers generic

Late Saturday morning, Ron Holmes drove off in his new van from a New Jersey dealership. After driving 250 miles yesterday from his home in Maryland, he was afraid he'd missed out on trading in his clunker, a 1995 Chevy van. But it all worked out, reports CBS News correspondent Randall Pinkston.

Holmes discount will amount to about $7,000, and that includes $3,500 from the Car Allowance Rebate System, known as Cash for Clunkers.

Its success was a major surprise.

"We sold nine cars since the program started," said Kamil Askhar, the general manager of Englewood Chevrolet. "That's within a week."

The $1 billion program, launched nine days ago, was supposed to last until November. Then on Thursday - a scare - reports the money had run out in just one week, making dealers like Ashkar very nervous.

"I'm not going to sell the car based on Cash for Clunkers unless I know I was guaranteed the money," Ashkar said. "There is no way the dealership can have $3,500 to $4,500 loss on a sale."

The White House guarantees the program at least through the weekend, so Ashkar is continuing to provide the clunker discount.

Saturday morning, Transportation Secretary Ray LaHood sought to reassure dealers and prospective car buyers that the plan would continue.

"No one should worry," LaHood said. "Go out and buy a car."

Click here to find out if your car's gas rating qualifies as a clunker

Click here for general information about the program

Analysts believe the Senate will have to follow the House's lead and guarantee the additional $2 billion to continue the program.

"The valid deals that are on the table right now I think the government will fund, because otherwise, they're leaving the dealership holding the bag," said Rebecca Lindland, an automotive industry analyst with HIS Global Insight.

While dealers like the program, they don't like the 136-page rulebook and a constantly-crashing Web site that dealers must use to register clunkers and get the government reimbursement. But there are no complaints about the ability to bring in more potential buyers.

"If there was no Cash for Clunkers program, would you be doing this trade in?" Pinkston asked Holmes.

"No, not today," Holmes said.

And no complaints from junkyard owners, who get the old cars from the dealers after the engines have been disabled.

"It's double the business," said Ed Malone with Brookfield Resource Management. "We're getting a lot more cars in. It's good for my business."

The government isn't sure yet whether the first billion has actually been spent yet. But if it has, it means the additional $2 billion Congress is expected to appropriate could be gone in less than a month.