UPDATE: Program Ends Monday Night. Dealers must submit all paperwork by Monday for eligible vehicles to qualify for the rebate.
According to the NADA chairman John McEleney, "National Automobile Dealers Association (NADA) officials have asked the government to suspend the cash for clunkers program because a survey by the group found that the $3 billion fund has been exhausted."
As McEleney said, "We asked them to put a halt to the program." This announcement came yesterday morning. By suspending the program for now, dealers will have time to submit all pending clunkers claims allowing the government to determine if any additional money is left after all claims are accounted for.
NADA made their suggestion to the government after conducting an electronic interview of its 18,000 dealer members throughout the U.S. earlier this week. According to the survey results, which included only a limited number of respondents, NADA believes that the funds are depleted.
Late yesterday, NADA warned its dealer members that they may not be reimbursed by the federal government if they continue to take cars in under the clunkers program. They urged their members to withhold from taking any more vehicles under the program or they would risk losing money if the funds are indeed depleted.
The NADA recommendation comes in response to an NHTSA confirmation previously that stated that, "Dealers who accept additional clunker deals face a growing risk that they may not be reimbursed. It's important to note that the NHTSA has confirmed that if the program's money runs out before a dealer is reimbursed, that dealer will not be paid."
The NADA report was met with some resistance from the Transportation Department. Transportation Secretary Ray LaHood said yesterday that he would announce a strategy for winding down the program in the next few days. The department relies on twice weekly surveys to assess how much money remains in the program and as LaHood said, "We can make a pretty good judgement call. I know dealers are frustrated, but they're going to get paid."
According to the Department of Transportation, claims for 411,624 clunkers amounting to $1.72 billion have been approved as of Tuesday. The different between $1.72 billion and the $3 billion NADA claims could be accounted for by rejected dealer applications that must be resubmitted.
Last time NADA claimed the funds were depleted was after conducting a survey at the end of July. This survey showed the initial $1 billion in clunkers funds was depleted. At the time, Lahood told Congress the program would be suspended. He was overruled by the White House which kept the program going by approving $2 billion in additional funds. If NADA was right before, chances are they could be right again.
According to LaHood and several other reports, the additional $2 billion in funds was expected to last until Labor Day. Funny thing how money never seems to last.
Source: Automotive News (Login Required)