As we enter the news day on Thursday, it appears that the "Cash For Clunkers" program could well be out of cash.
The National Association of Auto Dealers (NADA) asked the US government to suspend the program as of midnight last night, and warned dealers they are at risk of not getting reimbursed if they make any further clunker deals.
Survey: Funds spoken for
The alerts are based on a NADA survey that shows dealers have already completed enough clunker deals to exhaust the allocated $3 billion in funds. Dealers have only been reimbursed for about half of those funds, leading some to stop making clunker deals on their own.
If the funds are exhausted, the risk to dealers is real: "NHTSA has confirmed elsewhere that if the program's money runs out before a dealer is reimbursed, that dealer will not be paid," the dealer associated said pointedly, in a statement issued yesterday.
Transportation Secretary Ray LaHood contradicted that assertion yesterday, saying, "there will be no car dealer that won't be reimbursed." Dealers, however, are likely to err on the side of caution until the status of the program becomes clear.
White House overtaken by events
The White House had been planning to announce how the program would be wound down, perhaps as early as Friday. But the NADA survey indicates that it may have been overtaken by events.
NADA's survey went to all of its 18,000 dealer members, and results were extrapolated from the limited number of responses.
The clunkers program--formally known as the Car Allowance Rebate Systems (CARS) program--has worked unexpectedly well, and this marks the second time that government officials have been caught off guard.
That $3 billion in funding came in two stages: an initial $1 billion that was exhausted in the program's first week, and then a second allocation of $2 billion that was expected to last until Labor Day, even by the Department of Transportation.
Clunkers application rates varied widely among states, but carmakers nonetheless have started to run out of their most popular high-mileage models, including the Ford Focus. Only one hybrid--the 2010 Toyota Prius--was initially among the Top 10, and it too is almost sold out.
What should YOU do?
The program was originally conceived for $4 billion of funding, so it is possible that Congress will allocate a last $1 billion after it returns from its summer recess. But until then, it appears that clunker cash is largely spoken for.
What should you do if you're still interested in trading in your clunker? Watch the news carefully, and stay in touch with your dealer. And if or when further funds become available, go for it--because that really is likely to be your last chance.
Cash for Clunkers tradeins: Mercury Sable and Toyota Camry