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When I wrote this post, the news was just breaking, but it looks like (and the AP is reporting) that the Cash for Clunkers program was enough of a success that the government is cutting it a bit short.

If I’m not mistaken, it just started and has only used around $220 million of the $1 billion set aside for the program. The reason for the suspension of the program is that it is afraid that it may use up the funds too quickly. Early Thursday morning Transportation Department officials called lawmakers to tell them that they want to suspend the program.

It was just last month that Congress approved the Car Allowance Rebate System known as Cash for Clunkers. It was intended to boost sales of new cars, which have been quite sluggish since the recession began last year. It has been heavily advertised by the car dealerships and companies and this move is likely to anger the dealerships who have put a lot of money into their advertising. The program was supposed to last until November 1st. The program JUST started last Friday.

Through Wednesday night 22,782 cars had been purchased with the assistance of the program and $96 million had been spent from the CARS program.

A survey of 2,000 dealers by the National Automobile Dealers Association found about 25,000 deals had not yet been approved by NHTSA, or nearly 13 trades per store. It raised concerns that with about 23,000 dealers taking part in the program, auto dealers may already have surpassed the 250,000 vehicle sales funded by the $1 billion program. -AP

“There’s a significant backlog of ‘cash for clunkers’ deals that make us question how much funding is still available in the program,” said Bailey Wood, a spokesman for the dealers association.

Suspending the program seems like a bad idea to me. They did not suspend the voucher program for the digital TV transition when it ran out of money (and they let it run out of money before they did anything else about it). I just don’t think that this is a good move for the government to make especially when it comes to car manufacturers and dealerships that are already hurting, and now have thrown all their ad dollars behind a program that is no longer going to be functioning.

Jeremy

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