After last night’s abrupt news that the federal Cash for Clunkers program was nearly tapped out of funding, automakers and dealers who had been heavily marketing the program were forced to cancel ads and stop showroom sales in anticipation of a formal answer from the government today.
Word broke yesterday evening that the government’s $950 million set aside for the program (in addition to the $50 million aimed at running it) had run dry, sending dealers and automakers into a flurry. Many dealers halted sales altogether as they feared that, once the $950 million was gone, there would be no way for them to be reimbursed by the government despite honest efforts to comply.
Across the country, dealers are canceling television and print advertising, while others yet are taking deposits on new cars and holding them for customers until the government makes an announcement.
“Auto dealers and consumers should have confidence that all valid … transactions that have taken place to date will be honored,” a White House official said in a statement released to the media. No official figure has been announced regarding how many Cash for Clunkers reimbursement applications were submitted. The government said that there would be enough funding for well over 200,000 reimbursements of $3,500 to $4,500.
Still, some lawmakers seem optimistic about the program’s success and its future.
“This is simply the most stimulative $1 billion the federal government has spent during the entire economic downturn,” Michigan Republican Representative Candice Miller told the Detroit News. “The federal government must come up with more money, immediately, to keep this program going.But action must be taken fast, as the House was set to adjourn today for its August recess and not return until after Labor Day.
Initially, supporters of the program had asked for as much as $4 billion to fund it, but in the face of concern from some that too much money had been allocated, Congress cut that to $1 billion.
Automaker response
Meanwhile, automakers say that yesterday the government had hinted that money was running low for the program but that official word is not expected until sometime today. Hyundai ’s marketing team met late yesterday to discuss pulling Cash for Clunkers ads and replacing them with standard ads, reports Automotive News.
Toyota , on the other hand, sent word to its dealers reminding them that the government would not reimburse Cash for Clunkers trade-ins if the program was suspended.
Honda says it is waiting for official word before taking any action.
“Were probably sending a memo to our dealers saying we’re hearing conflicting reports, but there’s nothing final yet,” Honda spokesperson Sage Marie said.
