Cash For Clunkers Suspended

By: Andy Hodges
07/30/2009 11:38 PM ET

Update – Congress Approves Extension

This article has been updated! The Cash for Clunkers progream has resumed after congress approved a much needed extension.

The following content was published at the time when the program was suspended.

The Cash for Clunkers suspended rumor has been confirmed as federal transportation is telling dealers to stop taking applications at midnight. The program offered a cash voucher towards a new fuel-efficient car if their trade-in met certain qualifications. The car allowance rebate is either a flop or a high success to put cleaner vehicles on the road that produce fewer emissions.

The problem started on late Wednesday when the National Automobile Dealers Association surveyed its members and told the Transportation Department that 22,782 vehicles had been purchased through the government auto incentive program. Late in the day about $96 million had been spent, which prompted federal transportation officials to halt all applications at midnight. According to the government’s Web site, it still shows a chart indicating that $779 million was still available for trade-ins.

Cash For Clunkers Statement

“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,” a statement issued Thusrday evening by the White House.

While the statement doesn’t confirm that the program is suspending, it does indicate that all consumers that participated in the cash voucher program will receive their rebate. Several automobile dealerships began running TV ads earlier in the week that carried consumers to the showrooms. According to television station FOX 35 in Orlando, Florida, dealerships are still running clunker ads.

“Our TV spots started on Monday, but it wasn’t until Tuesday and Wednesday when things really got busy,” said Tom Malone, Orlando Ford Dealership. Mr. Malone believes that Congress will sign a new bill in law to add additional funding for the program. “It’s good for sales and the industry.”

The auto industry has been hit the hardest from the recent economic recession. Dealers are selling cars and consumers are saving money by trading in their clunkers for vehicles with better fuel economy. It is not clear what the White House will do, but speculations point to a new bill by Congress that could extend the program.

However, it’s apparent that US economists and Congress did not anticipate that funds would be depleted too quickly. The program went into law on July 1, 2009 and was to expire on November 1, 2009. So far, the program has helped the industry and the economy. If there’s any program that is proven to help the economy, this is probably the one.

Consumers are aiming for hybrid cars and other fuel efficient technologies before gas prices go up again. Gas prices soared to new levels in 2008 and consumers aren’t about to pay $5 per gallon again. Hybrid cars combine an electric motor and gasoline engine to provide extended mileage and fuel economy. It is not known how many of these types of vehicles were already sold during the Cash for Clunkers program.