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Friday, July 31, 2009

Hit Program 'Cash For Clunkers' Suspended

Finally something that worked, a program to turn in your old car (clunker) and get $3,500 or $4,500 toward a new, more fuel-efficient vehicle, has used up it's billion dollar allotment, in just one week.

Of course, naturally when a plan actually works, the most natural thing in the world to do it.... suspend it?

Perhaps if confusion would not have taken front seat to stimulating the economy, this plan could have been instantly extended to keep up the forward motion.

Some car shoppers are finding that their trade-in vehicles, which qualified for a Cash for Clunkers rebate last week, don't this week because of changes in the EPA's fuel economy ratings.

In some cases, car buyers say, dealers are backing out of sales they've already made because the EPA changed the fuel economy figures on their trade-in.

"My wife just received a call from the sales manager saying that our clunker doesn't qualify anymore, and that we could either pay the extra $4,500 or return the new car (and get our old car back)," Greg Straka wrote Tuesday on a message board at the automotive Web site.

He had signed a document agreeing to provide additional documentation needed to process his trade-in, but had not done so yet, Straka wrote.

He had made the deal for his new car last Saturday, the day after program rules were supposed to have been finalized, Straka wrote in an e-mail to But the fuel economy information on the car apparently changed the next day, he said.

Government officials claim they are working on plan to keep the cash for clunkers alive, but nothing firm has been agreed upon yet.

A White House official said, "We are working tonight to assess the situation facing what is obviously an incredibly popular program. Auto dealers and consumers should have confidence that all valid [cash-for-clunker] transactions that have taken place to-date will be honored."

Lawmakers are discussing with White House officials where to find funding -- including possibly tapping the government's Troubled Asset Relief Program, or TARP, a congressional aide said.

The clunkers program, which offers rebates of up to $4,500 to consumers who trade in old vehicles and buy new, more fuel-efficient models, began July 24 and sparked a surge in car sales.

"It was an absolute success," said Michael J. Jackson, chief executive of AutoNation Inc., the U.S.'s largest chain of auto dealerships. "There's a very compelling case the government should put more money into it. It's a great stimulus to the economy."

Congress had expected the $1 billion set aside for the rebates to last several months and set up the program to expire Nov. 1.

Amazing, a plan that showed incredible initial results, stimulates the economy and gets consumers spending again,, without bailouts, and they need to think about it?

In the meantime, businesses that expected this to last until Nov. 1, made plans, created and bought advertising to promote the cash for clunkers deal, just to find out it has been suspended?

Carmakers and dealers have booked expensive advertising to capitalize on buyers' interest in CARS, and now will be left promoting a tie-in with an uncertain government program — one that wasn't supposed to end until Nov. 1. "Disappointed," said Chrysler spokesman Scott Brown.

"It's too late to recall the ads," says Beau Boeckmann of Galpin Ford, the nation's largest Ford dealer, in Los Angeles. Galpin had done about 100 clunker deals and was hoping for more. " We had increased our ad budget to get the word out. We are very heavy on radio, newspaper and getting direct mail together," Boeckmann says.

"Now what do you tell people when they walk in" for a clunker deal? "It's tough."

More on that advertising:

Automakers have ordered millions of dollars in television ads. Dealers had the hot dogs, balloons and full-page Sunday ads in the newspapers ready to pounce on sales opportunities. And it is all in vain: the "Cash for Clunkers" program is on hold.

This would have been the first full weekend for the program. It was only last Monday that Transportation Secretary Ray LaHood officially kicked it off. Lots of momentum will be lost from the suspension, confirmed moments ago by sources.

$787 billion dollars on a stimulus program that had no chance to work and they only slap $1 billion into a plan like this that worked immediately..... anyone else see something wrong with this picture?

Quote of the day from Scared Monkeys:

These people can’t properly run “Cash for Clunkers” yet they are going to run GM? That’s priceless. The government cannot properly calculate a budget for the “Cash for Clunkers” program and these are the same people who want to nationalize health care. This program was supposed to run until October; however, after 7 short days they went bust. As Hot Air states, that is some miscalculation.

Just another day in Washington folks, nothing to see, move along now.