According to reports, the Cash for Clunkers Program could be running out of money, although the White House denies claims that the clash for clunkers program is being suspended.
The Cash for Clunkers program is designed to provide an incentive for people to trade their older vehicles for a new more fuel efficient car. Those that trade in a car that is 4mpg for fuel efficient receive $3,500 and $4,500 is provided for a 10 mpg increase. As part of the program, the traded in vehicle must be destroyed.
The Cash for Clunkers program was slated to run until November 01, 2009 or until its $1 Billion budget had been expended. However, it has become very popular and by July 28, around 16,000 dealers had signed up for the program.
If each of the dealers currently participating in the Cash for Clunkers program were to submit only 18 applications, the program’s budget would be completely depleted and there are reports that some dealers have already submitted more than 250 claims.
At midnight on Thursday, the Department of Transportation reported that the Cash for Clunkers program was being suspended, but these claims were later refuted by the White House Press Secretary Robert Gibbs who said, “We are working tonight to assess the situation facing what is obviously an incredibly popular program.”
Gibbs went on to say, “Auto dealers and consumers should have confidence that all valid cars transactions that have taken place to date will be honored.”
Reports that the Cash for Clunker program had been canceled fueled an increase in nighttime purchases by car dealers. To date, $150 million has already been paid out as part of the Cash for Clunkers program and $850 million is slated for pending applications.
Both Congress and the White House are reportedly looking for ways to continue funding for the Cash for Clunkers program, as it has proved an effective means of increasing new vehicle purchases and upgrading to more fuel efficient vehicles.