Sources: 'Cash For Clunkers' To Be Suspended

Program Began On Friday

Updated: 9:09 am CDT July 31, 2009

Congressional officials said Thursday that the government plans to suspend the popular "cash for clunkers" program amid concerns it could quickly use up the $1 billion in rebates for new car purchases.

The Transportation Department called lawmakers' offices late Thursday to alert them to the decision to suspend the program at midnight Thursday. The program offers owners of old cars and trucks $3,500 or $4,500 toward a new, more fuel-efficient vehicle.

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The congressional officials spoke on condition of anonymity because they were not authorized to speak publicly.

The program kicked off last Friday and was heavily publicized by car companies and auto dealers.

Through late Wednesday, 22,782 vehicles had been purchased through the program and nearly $96 million had been spent. But dealers raised concerns about large backlogs in the processing of the deals in the government system, prompting the suspension.

The concept behind the Car Allowance Rebate System program, known as CARS, is to boost auto sales and remove some inefficient cars and trucks from the roads, but there are conditions.

One condition is that trade-in vehicles must be continuously registered and insured for a full year. That one condition might mean a Madison man missed his chance.

Damien Wimmer said his 1992 Nissan truck has seen better days.

"Our mechanic has been saying there are some structural issues there," Wimmer said.

Wimmer said he was hoping to unload the truck with the clash for clunkers program, but he might already be out of time.

The president of operations in North America sent out a note to the people that got a hold of us. So we're under the impression that they've been told to get everything in if you want to get paid on it," said John Wineke, sales manager at Lancaster Toyota.

Lancaster Toyota said it is busy processing all cash for clunker sales on reports that congressional officials said the program will be suspended.

"We're definitely at max capacity. We're going to try and push as many as we can through tonight. We have to put a cutoff internally at about 11 (p.m.) just to try and keep up with what we have here as far as our standing business," Wineke said.

Wimmer said he tried to trade in his truck earlier, but couldn't.

"I saw the insurance thing, which of course worried me. But I followed up with that and I seemed to be OK," Wimmer said.

He doesn't insure the truck when he doesn't drive it. It's legal in Wisconsin, but it doesn't fit the cash for clunkers program's requirements.

The incentive got Wimmer's hopes up, but now he said a new car might be just out of reach.

"It's pretty disappointing. We had a chance to get a new car for basically half-price. They're already offering other rebates. Now we're still stuck with this," Wimmer said.

Right now, there's no timeline or official word on when the program could be suspended, but dealerships are preparing for it to happen quickly.

Wimmer said he was hoping there would be more time to straighten out his situation and get rid of his truck.

Wimmer had some legislators fighting his cause.

There is a bipartisan effort to get the National Highway Traffic Safety Administration to change the guidelines. Only Wisconsin and New Hampshire do not require drivers to have insurance.

Sen. Russ Feingold said that leaves out 15 percent of Wisconsin drivers, but it all might be a moot point now.

As of Tuesday, 16,000 auto dealers had signed up for cash for clunkers. That's about 80 percent of the nation's new-vehicle dealers.

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