Too Late: CfC Money’s Almost Gone. Buying This Weekend? C’mon In!

July 31st, 2009

Cash for ClunkersThe Cash for Clunkers program has surprised a lot of people with its success, but it may be too successful. The Detroit Free Press and others report that its funds are nearly exhausted, “leaving thousands of dealers and consumers in the lurch.” And yet, President Obama’s press secretary, Robert Gibbs, said yesterday,

If you were planning on going to buy a car this weekend, using this program, this program continues to run. If you meet the requirements of the program, the certificates will be honored.

Who’s on first here?

Lawmakers and the administration are making a desperate search today to find more funds before Congress adjourns—tomorrow. The NHTSA (National Highway Traffic Safety Administration), which runs the CARS (CfC) program, said that 22,798 vehicles worth about $96 million had been sold. They also said that the “vast majority” of deals were being rejected for incomplete or ineligible paperwork. NADA, the National Automobile Dealers Association, reported some 25,000 deals (13 trades per store) had been submitted but not yet approved by NHTSA.

The upshot seems to be that dealers may have sold, or agreed to sell, more than the 250,000 cars and trucks the plan has funds for. Ouch. One consequence is that dealers have invested millions in promoting the program this weekend—for nothing. We know how all-important recess is, but you Congresspeople had better get on the stick. We must assume the feds aren’t going to leave drivers and dealers holding the bag because they screwed up.

1998 Isuzu Rodeo

1998 Isuzu Rodeo (not the McGowans')

If it continues, the CARS program ought to be revised so it can live up to its original premise, which was not just providing stimulus to the car industry but getting truly dirty cars off the road. (Wikipedia has a good, up-to-date history here.) We’ve read too many stories like this one: Patrick McGowan and his wife told Bloomberg they

wouldn’t have traded in their 1998 Isuzu Motors Ltd. Rodeo for a new car if it weren’t for the $4,500 rebate they got through the clunkers program and the additional $2,000 rebate from Hyundai [for a new Elantra]… “Our car had 140,000 miles on it,” he said. “We in a million years weren’t going to buy a new car.”

How about, finally, getting the mileage and age qualifications straightened out so the program will really remove stinkers from the highway, instead of vehicles that are only marginal? If the government put money into a really effective (and lots less bureaucratic) CfC, we could all cheer.

Do you think the CARS/CfC program should be given more funding and continue? Or should the government find a more effective way to promote its environmental and economic goals?

—jgoods

UPDATE
Big front-page news this (Friday) afternoon: The House approved $2 billion to extend the CfC program. Funds will come from a set-aside approved for the Department of Energy. But don’t start dancing just yet: The Senate, still in session next week, must take up the matter, and all are expecting “spirited debate.”

There is still plenty of unhappiness among dealers, some of which echoes our points made above. See Adam Lee’s report to Green Inc., the energy/environment/business blog of the NY Times. His remarks are spot on, according to others I’ve heard.

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