US may suspend ‘cash for clunkers’
Officials fear $1b program is running out of money
The government could suspend its popular “cash for clunkers’’ program today, amid concerns it may have already exhausted $1 billion in rebates for new car purchases a week after kicking off the promotion, according to media reports.
The program, designed to boost slumping auto sales, offers owners of old cars and trucks $3,500 or $4,500 toward a new, more fuel-efficient vehicle. In Massachusetts, local dealers reported brisk sales because of the discount, and now some worried the suspension would be another set back for the industry.
“It would devastate everything we have been doing,’’ said Joe Bellizia, sales manager for Cambridge Chevrolet & Honda. He said his dealership has been jammed with customers trading in their old cars. The dealership has already delivered four cars under the promotion and is slated to deliver eight more today.
Bellizia he said he wasn’t sure what the dealership would do if the program were suspended and it couldn’t get reimbursed for the cars that have already been sold. He said the dealership could potentially be on the hook for more than $35,000 in payments.
A White House official said later that officials were assessing the situation facing the popular program, but auto dealers and consumers should have confidence that transactions already made under the program would be honored.
Jerry Chase Jr., owner of Framingham Ford Lincoln Mercury, couldn’t believe the program might be suspended, figuring there was enough money to last until September. “I’m shocked,’’ said Chase. “I’m having a hard time believing that many cars could be sold and registered.’’
Chase said the dealership has already deliv ered a dozen cars under the program and another 15 customers have applied. He estimated sales were up by 50 percent because of the discount and said the dealership hasn’t been this busy since the recession began more than a year ago.
“It’s been a tremendous stimulus,’’ he said. “I would hope [the government] would look at it and pony up additional money.’’
Massachusetts dealers also have been busy because the state sales tax is set to rise to 6.25 percent tomorrow, spurring some customers to rush to file their orders by the end of the month.
Ernie Boch Jr., head of Boch Automotive of Norwood, said he thought the suspension was the latest example of how poorly the program was run. Its rollout was riddled with glitches, its rules left room for potential corruption, and the government’s website for processing the promotion’s paperwork crashed within hours after the launch, Boch said. He said over the past week he has sold 26 cars under the program but hasn’t been able to submit most of the paperwork for reimbursement.
“It’s ridiculous, failed, debauched - you name it,’’ said Boch.
Rae Tyson, a spokesman for the National Highway Traffic Safety Administration, which administers the program, declined comment.
Congress last month approved the Car Allowance Rebate System program, known as CARS, to boost auto sales and remove some inefficient cars and trucks from the roads. The program kicked off last Friday and was heavily publicized by car companies and auto dealers. The promotion - slated to run through Nov. 1 or as long as the funds last - offered new car buyers cash vouchers for cars that get less than 18 miles per gallon and are less than 25 years old.
The government may suspend the program because it was concerned it was running out of money. Many of the reimbursements haven’t been processed because of the backlog on the government website.
A survey of 2,000 dealers by the National Automobile Dealers Association found about 25,000 deals had not yet 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.
“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.
Last night US Senator Debbie Stabenow, a Michigan Democrat, called the program a success and urged Congress and the White House to provide additional funding for it to continue until November.
Material from Globe wire services was used in this story. Todd Wallack can be reached at twallack@globe.com. 
