Guzzler program still operating; White House searches for funds

The federal cash-for-guzzlers program continues to operate this morning despite dealer reports that it was to be suspended at midnight last night because it was approaching its $1 billion limit.

"It is not suspended," a White House spokeswoman, who asked not to be named, said in an interview today. "We continue to assess the program and its budget."

National Automobile Dealers Association spokesman Bailey Wood said Thursday that the group had been told by Transportation Department officials of plans to suspend the program after just six days.

Administration officials have been meeting with House Speaker Nancy Pelosi, D-Calif., and sponsors of the cash-for-guzzlers legislation in an attempt to explore possible solutions, Pelosi spokesman Drew Hammill said.

"We're focused on getting results back on the success of the program," Hammill said in an interview.

Transportation Department spokesman Rae Tyson declined comment, and Wood was not immediately available for comment this morning.

NADA is planning to send an advisory to members this morning on how to respond to the anticipated shortfall, Wood said Thursday.

Members of the Michigan congressional delegation also are meeting this morning to discuss how to expand funding for the program.

Transportation officials met with lawmakers Thursday to assure them that dealer claims for federal reimbursement would be met through midnight last night, said U.S. Rep. Fred Upton, R-Mich.

A NADA survey of 2,000 dealers found evidence of a backlog of nearly 200,000 pending claims that, if filed, would probably deplete the program's $1 billion budget, Wood said.

The program, which began processing dealer claims for reimbursement of $3,500 to $4,500 consumer credits on July 24, was supposed to continue through Nov. 1.

"Incredibly popular"

"We are working tonight to assess the situation facing what is obviously an incredibly popular program," a White House official said in an e-mail late Thursday to Automotive News. "Auto dealers and consumers should have confidence that all valid CARS transactions that have taken place to date will be honored."

CARS stands for Car Allowance Rebate System, the official name for the program known popularly as cash for clunkers or cash for guzzlers.

The program was part of a congressional effort to revive slumping U.S. sales and further help domestic automakers, especially General Motors Co. and Chrysler Group, which have emerged from brief bankruptcies.

Sales spiked more than regulators anticipated this week after the government began logging transactions and approving rebates that indicated consumers were opting for vehicles that get significantly better gasoline mileage than the models they were trading in.

Funds sought

The administration opted to keep the program in place while it sought new money. It was not clear late Thursday where the administration would find additional funding in a short period of time.

"We hope there's a will and a way to keep the program going a bit longer," GM said in a statement. "Any doubt that the program would jump-start auto sales is completely erased."

An estimated 16,000 dealers were eligible for the program and each would have to sell more than a dozen vehicles at the maximum rebate to reach the government's funding limit, according to NADA.

U.S. Sens. Dianne Feinstein of California and Susan Collins of Maine said any extension of the incentive must require greater fuel efficiency and higher reductions of auto emissions.

Congress wrestled with both issues when it established the current incentive to give U.S. manufacturers a better chance of qualifying for the program.

U.S. auto manufacturers are scheduled to report their July sales on Monday.

Data released earlier Thursday by the government showed that dealers had submitted 22,782 deals seeking $95.9 million in refunds.

The NADA survey suggests that if the entire backlog of orders were filed with the government, its $1 billion budget would be depleted, Wood said.

By Neil Roland- Automotive News