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US to end 'clunkers' rebates on Aug. 24

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

A vehicle sits in a dumpster on display in front of Bill Wink Chevrolet dealership to attract customers in for the "Cash For Clunkers' program in Dearborn, Michigan August 6, 2009. [Agencies]

To address dealers' concerns, General Motors Co said on Thursday it would provide cash advances to dealers to give them liquidity to run their businesses while they await government's checks.

GM said sales in the past two months had exceeded its internal forecast by more than 60,000 vehicles, largely driven by the "clunkers" program.

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?

The automaker said it intended to provide advances for qualifying new vehicle sales already transacted under the rebate program and would provide advances as long as the program was in effect.

By late July, the "clunkers" program, inspired by similar programs in Europe, had been drained of its original $1 billion budget. Congress authorized another $2 billion to extend the program, which has been likened to a shot of Adrenalin for the US auto market.

"Given the popularity of the program and the rapid pace at which 'clunker' deals are being done, it is difficult, if not impossible, to accurately project the 'burn rate' of available funds," the National Automobile Dealers Association said in a statement.

US retail vehicle sales in August are projected to exceed 1 million units for the first time in the past 12 months, boosted by the rebates, auto industry forecasting firm J.D. Power & Associates said on Thursday.

Combined with sales to fleet customers, such as rental companies and government agencies, total light vehicle sales are expected to come in at 1.1 million units in August, down 8 percent from a year earlier, J.D. Power said.

"Improved consumer confidence and credit availability during the past six months have combined with the (rebates) program to lift industry sales out of their slumping year-to-date levels, which have been down approximately 35 percent year over year," said Gary Dilts, senior vice president at J.D. Power.

On a seasonally adjusted basis, widely tracked by analysts, US August auto sales could be as high as 12.2 million units, up from 11 million units in July and the highest rate of 2009, the agency said.

 

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