The federal government agreed Thursday to allow customers to order cars from factories under the “cash for clunkers” program rather than limit them to the slim pickings on dealer lots.
Ford Motor Co. said Thursday it would ramp up North American production 18 percent in the third quarter to help replenish those depleted inventories. Its Focus compact and Escape crossover are two of the top-selling vehicles in the cash for clunkers program.
“What they’re announcing today will not be available to dealers until September,” said Edmunds.com analyst Michelle Krebs. Many dealers and analysts expect the program to run out of funds before then.
Meanwhile, the National Highway Traffic Safety Administration (NHTSA) reportedly told dealers in a conference call Wednesday that 80 percent of clunker transactions submitted to the agency for reimbursement have been rejected, in many cases for simple clerical errors.
Industry publication Automotive News late Thursday cited three dealer association heads who listened to the call, but said the agency would not confirm details of the discussion.
The Department of Transportation said that as of Thursday, dealers had submitted 338,659 clunker transactions for reimbursement totaling $1.4 billion.
Jim Appleton, president of the New Jersey Coalition of Automotive Retailers, told Automotive News that NHTSA said dealers have only received payments for 2 percent of the processed requests.
A Department of Transportation spokesman did not respond to several requests from The Washington Times on Thursday to explain the payment delays.
Two Washington-area dealer groups said this week they each were owed nearly $3 million by the government.
Two Michigan Republicans, Reps. Candice S. Miller and Fred Upton, wrote to Transportation Secretary Ray LaHood on Monday asking that buyers be allowed to order cars from the factory.
“They’re responding to the overwhelming interest in this program,” said Mrs. Miller, an original co-sponsor of the bill to create cash for clunkers.
“We’re not asking for an extension or any more money, but we want to maximize the program,” she said Thursday.
“Allowing consumers to order vehicles and qualify for the rebate will expand buyers’ choices and keep production lines running,” Mr. LaHood said.
Ms. Krebs said inventories of popular models had fallen to nearly “nothing.”
“It’s a logical evolution of the program. There’s not much left on the ground to buy,” she said.
Overall, cars made by American automakers are selling just as well against imports in the clunkers program as they do normally, Ms. Krebs said. The market share of domestic models is typically about 45 percent, she said.
Mrs. Miller said figures she has seen indicate Detroit’s market share has been even higher than that in the program.
She added that dealers tell her a substantial majority of customers trading in clunkers are traditional used-car buyers.
“They never buy new cars, which is good as far as I’m concerned because there is still huge pent-up demand among the public for new cars.”
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