Obama admin could be looking to end Cash for Clunkers

Update: The U.S. Transportation Department has in fact just announced the Cash for Clunkers program will end on Mon Aug 24, 2009. The department said it believes there will be enough cash left in the program for dealers up until the 8pm Monday deadline.

Reports indicate the Obama administration is looking at slowing down or even ending the Cash for Clunkers program with an announcement coming tomorrow.

The National Automobile Dealers Association (NADA) today announced it wants to see the Obama administration begin to shut the program down because its dealers could be left on the hook with rebates owing to customers if the program runs out of allocated funds.

 The NADA says that deals are being made so rapidly and dealers are having to wait days to get their payments to pay the rebates to customers, that it is possible the dealers could be left to flip the rebates.

Some dealers have already stopped participating in the program because they cannot afford to offer the rebates anymore.

The US Transportation Secretary Ray LaHood said yesterday that, “[Dealers are] going to get their money.”

The NADA said that they were able to confirm with other sources that if the program used up all the allocated funds, dealers would not get additional cash and would be responsible for the rebates.

The Cash for Clunkers program offers between $3,500-$4,500 in cash rebates for consumers that trade in their older vehicles for newer more fuel-efficient vehicles.

The Senate has allocated up to $3 billion for the program, but at the rapid pace deals are being made, those funds could finish up by the end of September.

To date, the program has generated 360,000+ auto sales.

The Senate today earmarked an additional $2 billion for the program which originally launched on July 24, 2009.

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Hercules holds a B.Comm Finance from Ryerson University in Toronto, Canada. He is a Chartered Financial Analyst (CFA) level 3 candidate. He was previously a contributor at FiLife, a finance website owned by Dow Jones and IAC. Write to [email protected]
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