The brand new Cash for Clunkers government program which was designed to help stimulate the car industry as well as the general economy has come to a quick end. The plan was funded with $1 billion for the trade-in credit. The program was to run to November 1, 2009 or until the funding was depleted.
[edit Dec 9 – Cash for Caulkers
The way the Cash for Clunkers plan worked was that a person could trade in a car on a new car purchase and as long as they met certain requirements, they would be eligible for $3500 or $4500 which would be applied to the new car purchase. The main criteria was that the difference in mileage between the two cars had to be large enough to qualify for the credit.
It’s been reported that the program has been stopped since the government is worried the claims on trade-in credits might have reached the $950 million limit. I had thought the program would run a lot longer than a few days. If the average credit is $4,000 then you need to have 237,000 eligible trade-ins to use up the money. Some dealers must have been pretty busy! I wouldn’t be surprised if it turns out that fraud and poor accounting also helped to bring the program to a halt prematurely. It’s very likely that a portion of the deals waiting for approval could be rejected.
From Fox News:
Transportation Department officials called lawmakers’ offices earlier Thursday to alert them of plans to suspend the program as early as Friday. But a White House official said later the program had not been suspended and officials there were assessing their options.
There is a possibility that the program could get extended:
A source told FOX News that senior Congressional leaders, the Obama administration and other lawmakers involved with the program are exploring potential options to either undertake administrative or possibly even Congressional action to infuse the program with cash.
There is a lot of uncertainty regarding how many consumers have made use of the Cash for Clunker program:
A survey of 2,000 dealers by the National Automobile Dealers Association found about 25,000 deals had not yet been approved by NHTSA, or nearly 13 trades per store. It raised concerns that with about 23,000 dealers taking part in the program, auto dealers may already have surpassed the 250,000 vehicle sales funded by the $1 billion program.