Well, it was fun while it lasted. The government’s Cash for Clunkers program, otherwise known as the Car Allowance Rebate System (CARS) program, ends on Monday night, August 24th.
The plan offering incentives up to $4,500 to auto owners who trade in their old vehicles for new, more fuel-efficient models began on July 24th was expected to last until November 1st. Congress originally appropriated $1 billion for the program in July and added another $2 billion two weeks later. Due to overwhelming buyer response to the program, almost all of the money was spent in the first three weeks and it is unclear whether or not there are enough funds to make it through the final weekend.
Obama administration officials said calculations show there is enough money left to get through the weekend but that buyers and dealers should get their paperwork done and submitted before 5 p.m. on August 24th. President Obama said on the 20th. that the program “been successful beyond anybody’s imagination. And we’re now slightly victims of success because the thing happened so quick, there was so much more demand than anybody expected that dealers were overwhelmed with applications.”
Administration officials claim the program met its dual goals of stimulating the economy and removing low-mileage clunkers from the roads. Despite a Labor Department report showing increased manufacturing in July because demand triggered increased production runs at General Motors, Ford and Toyota, there is no additional funding for the program on the horizon. The official position now seems to be to close down the program and sort out the paperwork. Some dealers have complained they haven’t been reimbursed quickly enough, but administration officials promise that payments will be completed as soon as they finish processing the nearly half a million transactions already turned in.
Because there are no plans to seek additional funding for the Clunkers program, and an absolute deadline looming on Monday, dealers across the country are preparing for a tidal wave of customers over the final weekend the program will be in effect.
The government’s Clunker program might not be the last auto-industry stimulus we see this year however. Some U.S. auto retailers are already scrambling to create their own new, separate and privately funded stimulus plans to help customers who didn’t or couldn’t take advantage of the original government plan. Dealer-created programs, like the 2009 New Dealer Auto Stimulus Plan (autostimulusplan.com) have looser requirements than the Clunker deals with fewer restrictions on the price, year, or mileage of trade-in vehicles.
Even though the Clunkers program ends on Monday, the immediate successes of the government plan along with the introduction of new private plans, are good indications that we have not seen the last such stimulus yet. Who knows? Perhaps next year, instead of targeting low fuel-mileage clunkers, the government will aim a stimulus plan at removing the most unsafe vehicles from the road and offer consumers a “Dollars for Deathtraps” program. Time will tell.
