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US to end 'clunkers' rebates on Aug. 24

(Agencies)
Updated: 2009-08-21 23:00

 

Two vehicles sit in a dumpster on display at Bill Wink auto dealership to attract customers in for the "Cash For Clunkers' program in Dearborn, Michigan August 6, 2009. [Agencies]

DETROIT/WASHINGTON: The US government said it will suspend its popular "Cash for Clunkers" auto rebates on Monday as the program's $3 billion budget runs dry, a month after it was launched.

The program, offering payments of up to $4,500 to people who trade in old gas guzzlers for new, fuel-efficient vehicles, will end at 8 p.m., August 24, by which time all applications for the rebates must be submitted to Washington.

Related readings:  Getting clunkers and distracted drivers off the road  US Senate clears $2B 'clunkers' extension  Senate reaches deal to save 'cash for clunkers'  Is 'cash-for-clunkers' all it's cracked up to be?

"We've seen an overwhelming and overnight success and so much so that we've reached the point where we need to wind this program down," a senior administration official said on Thursday.

"The goal of the wind-down is to provide a soft landing for dealers and consumers and ensure the program ends in a successful way," the official told reporters during a background briefing. The official asked not to be named.

The Transportation Department said it thought enough money would be left to continue accepting submissions until the Monday deadline, based on conservative estimates of valid transactions to date.

The announcement comes a day after a group representing some 20,000 new car dealers in the United States warned that dealers who accept additional sales under the program face a growing risk that they may not be paid back the rebates they have already given customers.

Dealers have complained of difficulty running businesses while awaiting government checks under the program.

As of Thursday, auto dealers had submitted claims to Washington for nearly 457,500 vouchers totaling $1.9 billion, of which just under 40 percent of the applications have been reviewed, according to the Department of Transportation.

The government has paid about $145 million to dealers.

The administration official said that a large number of applications had been returned to dealers, to be resubmitted, due to "inaccurate or incomplete" information.

The official advised dealers to get all of the necessary documentation and paperwork available before submission to ensure they have a valid deal.

The weeks-long delay in reimbursements has placed additional burden on dealers whose balance sheets have been hit hard by tight credit and the worst US auto sales in nearly three decades.

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