House OK’s more funds for ‘clunkers’

Yesterday, the House voted 316 to 109 to take funds out of the $787 billion stimulus package that had been set aside for loan guarantees for renewable energy. The Senate is expected to deal with the issue next week, and it’s unclear whether members will approve it. Under the program, owners of certain old cars and trucks are offered $3,500 to $4,500 toward the purchase of a new, more fuel-efficient vehicle. Congress originally approved $1 billion for the program, funds that were supposed to last a few months.

But the promotion, aimed to boost slumping auto sales, has been so popular that many believe the money is gone. Officials don’t know for sure because of a backlog of sales that need to be processed, a problem that dealers have complained about all week.

With the program in limbo, dealers and customers across the country weren’t sure what to do. White House officials insisted the program is still in effect, and the government would honor deals made under the promotion. But some dealers are skeptical.

“We’ve sold a lot of cars, and none of my cars have gotten funded yet,’’ said Raymond Ciccolo, president of the Village Automotive Group, which has sold up to 100 vehicles under the program. “We’re trying to wade between upsetting the customer and creating ill will, and just going on blind faith that the government might pay us.’’

Ciccolo wasn’t willing to take chances. Yesterday he stopped offering the cash for clunkers incentive at his seven dealerships, fearing that if the program ran out of money, he could be on the hook for several hundred thousand dollars.

Ernie Boch Jr., head of Boch Automotive in Norwood, said he continues to offer the incentive but is making customers sign a contract saying they’ll pay up if the government can’t. He estimates that his dealerships have sold roughly 700 vehicles under cash for clunkers.

“You’ve got hundreds of people looking to do a deal. What are you going to say? ‘Oh, I’m sorry, the government is so [messed] up that I can’t do a deal with you,’ ’’ Boch said. “Being in the auto industry, if somebody wants to buy something, you want to sell it, especially in these hard economic times.’’

Boch’s contingency contract, however, put off at least a few customers, he said.

One of those was Ron MacPhee. Lured by the cash for clunkers offer, the Medway resident traded in his 2004 Kia Sedona for a new Toyota Rav4 a week ago. Several days after making the deal, but before his new car was delivered, MacPhee said he was asked to sign the contract saying he’d pay the rebate if Uncle Sam couldn’t.

“I said no. Now I don’t have a car,’’ MacPhee said yesterday. “I never would have walked into Boch to buy a car if this incentive program wasn’t in place.’’

The confusion around cash for clunkers - which some car makers have been matching - couldn’t come at a worse time in Massachusetts. Yesterday, consumers were trying to beat a sales tax increase from 5 percent to 6.25 percent, which goes into effect today.

Many of those consumers called local legislative offices, urging their lawmakers to keep the promotion going. Concerns that cash for clunkers would end were spurred by a survey of 2,000 dealers by the National Automobile Dealers Association that found about 25,000 reported deals, or nearly 13 trades per store, had not been logged by the National Highway Traffic Safety Administration, which administers the program.

That made many question whether the 23,000 dealers participating in the program had surpassed the 250,000 vehicle sales the promotion was supposed to fund.

As of yesterday, the highway traffic administration had processed close to $303 million under cash for clunkers, according to a person briefed on the matter.

John Wolkonowicz, an auto industry analyst at the Lexington forecasting firm IHS Global Insight, said if the initial funding has been exhausted, “this is probably the best billion they spent in the entire recovery package. It’s gotten auto sales supercharged.’’

Wolkonowicz had previously questioned whether the program’s incentives would entice consumers wary of making large purchases in a recession, especially if they were trading in a larger vehicle or luxury gas-guzzler that might be worth more than the promotion. “If this is all true, the government needs to put as much money as they can into this because it’s going to get the auto industry launched,’’ he said.

Formally known as the Car Allowance Rebate System, the promotion was approved by Congress in June. In general, all trade-ins must be less than 25 years old, get 18 miles per gallon or less, and be scrapped. But from the onset, there were problems. The program was supposed to start on July 1 but got delayed until July 24. The rules were complicated, and the list of qualifying vehicles and other requirements changed repeatedly, several dealers said. The program involved mountains of paperwork, and the government website that collected the submissions kept crashing, creating a backlog, they said.

At Ciccolo’s Nissan dealership in North Attleborough, where about 20 vehicles have been sold under the program, Ciccolo said one manager was in the office until 2 a.m. Thursday, trying to submit reimbursement paperwork. “The computers just wouldn’t accept it,’’ he said.

The same thing happened to Chris Lemley, president of Sentry Auto Group in Medford, Dorchester, and Shrewsbury, who said that his salespeople struggled to enter deals until midnight on a system that kept crashing.

“The government has not at all been prepared to handle the administrative side of it,’’ Lemley said.

It was unclear yesterday whether the Senate would approve more money for the program. Senator Debbie Stabenow, a Michigan Democrat, called the promotion a success and urged additional funding. However, Senator Dianne Feinstein, a California Democrat, and Senator Susan Collins, a Maine Republican, issued a joint statement asking that any extension come with higher fuel efficiency standards and greater emissions reductions.

President Obama called the program an “overwhelming success’’ and urged the Senate to pass legislation.

Globe correspondent Sean Sposito contributed to this report. Erin Ailworth can be reached at eailworth@globe.com.