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Summary:

The cash for clunkers program, after one near-suspension, two 11th hour votes, and a tripling of its funding, has almost survived the entire summer — but there’s not much left in the coffers. Launched last month, the program provides rebates of up to $4,500 for fuel […]

cash-for-clunkers-cars-logoThe cash for clunkers program, after one near-suspension, two 11th hour votes, and a tripling of its funding, has almost survived the entire summer — but there’s not much left in the coffers. Launched last month, the program provides rebates of up to $4,500 for fuel efficient new cars in exchange for old gas guzzling trade-ins, and it has been popular enough during the last four weeks that remaining funds can only cover rebates for an estimated 200,000 more cars, which is a little less than half of the number of vehicles already traded in through the program.

Back in June, legislators expected $1 billion to last through October. But before the week’s up, the Obama administration will announce plans for “winding down” the program that has swelled to nearly $3 billion.

Even in its closing the program is still surrounded by controversy. Some dealers are dropping out due to delays and fears that rebates won’t come through at all, questioning how good a handle the government has on how many deals have really been made through the program. As the National Association of Auto Dealers, or NADA, explained in a message to its members yesterday, “Given the popularity of the program and the rapid pace at which ‘clunker’ deals are being done, it is difficult, if not impossible, to accurately project the ‘burn rate’ of available funds.” So the Department of Transportation might actually owe more than it anticipates, and once the $3 billion in funding runs out, reimbursements will end.

According to a report from Reuters this morning, the federal government expects clunker deals to spike once it announces an expected end date, and “wants to avoid a situation where dealers agree to sales after the program’s funds have been exhausted.” NADA really wants to avoid that situation, and reportedly asked for the program to be suspended as early as midnight last night. General Motors, meanwhile, hopes to assuage dealers who have yet to be reimbursed by the feds — and keep the clunker-driven vehicle purchases coming — by offering advance payments on government rebates.

The cash for clunkers program has had legislators and dealers scrambling almost from Day 1. It represents a very expensive approach to reducing greenhouse gas emissions (at least 10 times costlier than the going rate for carbon reductions), as well as a missed opportunity to deliver greater gains in fuel efficiency and emission reductions. The program is also the reason a loan guarantee program for renewable energy projects is now $2 billion thinner — nearly as much as the  program meant to build up an entire domestic battery industry for electric and hybrid cars.

So let’s hope for a more reasoned approach to the winding down than there was for the ramping up, and a minimal hangover for the auto industry so we can get on with cleaning up vehicle emissions. And when Congress comes back to work, hopefully they’ll find some way to restore the $2 billion for clean energy.

By Josie Garthwaite

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  1. After all, it is not really necessary to change the ENTIRE car: it´d be best just to convert the cars to ethanol or some other less polluting fuel.

    This people seem to do that http://www.1hourflex.com

    But I bet there are others as well.

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  2. Good…, as they say, all good things come to an end. Actually, this could be considered a BAD thing b/c it’s CRAZY, we are giving people money to live more vicariously and lavishly than before all this economical bust took place? What are we doing? Spoiling every single last American? Let’s learn to live in moderation, then we wouldn’t have so much debt…Well, the fish sticks from the head..so the head is the While House…right?

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