New York (ECN) - The U.S. Federal Government did not anticipate the popularity of the Cash for Clunkers Program. The one billion dollar stimulus initiative, which began as the Car Allowance Rebate System, was started as an effort to reenergize the failing auto industry. The initiative was also an attempt to get gas guzzlers off the road.
As of midnight, Thursday, July 31, 2009, the program has been suspended. The reason: The US government is not quite sure they will have enough money to pay for contracts signed through yesterday.
Congress is not sure how the program will be funded in the future; however, they will be in session for a while contemplating the situation. Consumers are told to be patient. Those with signed contracts will have their contracts honored.
One of the main supporter s of the program, Senator Debbie Stabenow, Democrat-Michigan, expressed her concern and asked that congress strongly find alternate funding for the program. She stated the effort has resulted in approximately 200,000 sales nationwide.
Senator Stabenow stated, "I am delighted to hear that all of their sales people are busy and they are selling more cars in a day than they had been selling in a month."
The Cash for Clunkers program was scheduled to end on November 1 or when the one billion was depleted. The original version of the program stipulated a budget of 4 million dollars was to be appropriated.
The plan began offering $3500 to $4500 on the purchase of a new vehicle to individuals trading in gas guzzlers. Guzzlers are defined as vehicles obtaining 18 mpg or less in city or on the highway.
Auto dealers are now waiting to see how the government will go from here before accepting any more clunkers.
Representative Mike Rogers, Republican-Michigan, stated on Thursday, "We're going to try to figure out what's a realistic amount of money and get it into the program."
Auto dealers stated that the response has been overwhelming. Consumers are rushing to trade in older less fuel efficient models for newer vehicles getting more miles per the gallon. The vehicle purchased cannot be pre-owned.
Sources:
http://money.cnn.com/2009/07/30/autos/cash_for_clunkers_suspended/?postversion=2009073108
http://www.washingtonpost.com/wp-dyn/content/article/2009/07/31/AR2009073101173.html
