Clunkers Program Drives into the Sunset
The U.S. government's "cash for clunkers" program, which pays Americans $3,000 to $4,500 to trade in their older model vehicles for fuel efficient new ones, may have been popular, but it was not without its share of problems. Because demand far exceeded the government's expectations, Congress had to increase funding to $3 billion from $1 billion. And the program, which was originally expected to last through Labor Day, ends today with just $320 million worth of vouchers remaining to distribute. Now, many auto dealers say they need more time to submit the paperwork required to be paid for the vouchers they distributed, and many have yet to be paid even though their paperwork is complete.
"We expect a nationwide rush at the end of Monday that will clog the government computers," Scott Lambert, executive vice president of the Minnesota Auto Dealers Association, told the Minneapolis Star-Tribune. "If that means dealers can't get their deals submitted on Monday night, we'll go back to our congressional delegation and ask for some leeway on the federal deadline." Most of Minnesota's dealers are still waiting to be reimbursed, Lambert also told the paper. Of the 12,000-plus sales so far, subsidies for 82% of them — worth about $50 million — still are pending, he said.
The Wall Street Journal reports that many dealers are moving early to halt sales to give themselves time to process paperwork. They worry that if a last-minute rush to enter applications jams the system, they will be on the hook for rebates already given to customers.
For more from Knowledge@Wharton about the program and the state of the auto industry, see: Can 'Cash for Clunkers' Help Jump-start the Auto Industry?