- The Washington Times - Thursday, August 20, 2009

The federal government is hitting the brakes on the popular “cash for clunkers” program before there are too many clunkers and not enough cash.

The $3 billion plan, which gives consumers rebates of up to $4,500 if they trade in gas guzzlers for more fuel-efficient vehicles, will end Monday at 8 p.m., Transportation Secretary Ray LaHood said Thursday.

This program has been a lifeline to the automobile industry, jumpstarting a major sector of the economy and putting people back to work, he said.

More than 457,000 vehicles were sold through the program as of Thursday, using $1.9 billion in rebates.

Analysts said the government was worried that the program’s funds could be overdrawn before officials are aware of it as transactions make their way through the system.

“There’s this fuzziness about how many deals are in the queue. They don’t know how many vouchers are waiting to be processed,” said Jeremy Anwyl, chief executive officer of auto information site Edmunds.com.

“Shutting down early is better than going to Congress for more money or telling consumers they’re out of luck,” he said.

“We expect there will be a flurry of activity over the weekend,” Mr. Anwyl added.

The extraordinary response to cash for clunkers delighted government officials, dealers, automakers and the thousands of auto workers who returned to work to meet the increased demand. But it also created extraordinary headaches and snafus.

The program’s original $1 billion authorization — expected to last three months — threatened to run out in less than two weeks, unsettling officials and generating debate in Congress about allotting more funds.

Supplies of the most popular low-emission vehicles such as the Ford Focus and the Toyota Prius quickly dwindled.

Many dealers are still waiting for government reimbursement for the rebates they advanced to customers more than a month ago. Some area Washington-area dealers say they are on the hook for $3 million. Under program rules, they were supposed to be paid within 10 days.

To date, the government has paid just a small fraction of the voucher claims. The Transportation Department has promised dealers it will hire more than 1,000 extra workers to alleviate the delays.

The Virginia Automobile Dealers Association said Thursday that a quarter of its members had quit the program because of paperwork hassles, lack of reimbursement and uncertainty about when the program’s funds would be exhausted.

The group said nearly 15 percent of the deals submitted by members have been rejected and resubmitted.

The federal government has approved just 5 percent of the deals, and less than 3 percent of those have been reimbursed, the Virginia dealers group said.

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