The federal government said Thursday afternoon that it would shut down its Cash for Clunkers rebate program by 8 p.m. on Monday, Aug. 24.
The shutdown affects new deals submitted after the deadline, but the government has insisted that existing deals will be honored.
The news came shortly after an Automotive News report this morning cited a survey conducted by the National Automobile Dealers Association, which estimated that all of the program's money had been committed.
About $1.9 billion of the total $3 billion allocated has been claimed, according to the Department of Transportation, and dealers, according to the Detroit Free Press, have roughly $400 million in deals they haven't submitted.
"This program has been a lifeline to the automobile industry, jump starting a major sector of the economy and putting people back to work," US Transportation Secretary Ray LaHood said in a press release. "At the same time, we've been able to take old, polluting cars off the road and help consumers purchase fuel efficient vehicles."
While the program has generated an estimated 700,000 new car sales, the program's complex rules and paperwork &mdash which requires dealers to sell vehicles before getting reimbursed by the government &mdash has triggered a torrent of backlash from car buyers who have been waiting weeks without a new ride.
"It's not inspiring confidence with the dealers or with me," said Paige Dickinson of New Bedford, who traded in her 1996 Jeep Cherokee for a 2009 Honda Fit. "[The dealers] are in a bad position, too. It's a clog-up."
Only about 1 percent of rebates submitted by Massachusetts dealers have been approved, according to Robert O'Koniewski, executive vice president of the Massachusetts State Automobile Dealers Association. About $4 million worth of rebates have been submitted, O'Koniewski said, who called the program "an administrative nightmare."
"The fact that it's ending will be a sigh of relief for everyone involved," he said. "There's a lot of money on the street and dealers aren't getting any of it."
Thomas Tague, who traded in his daughter's Jeep Cherokee for a Mini Cooper, said he's still waiting for his new car, despite numerous phone calls to the dealer.
"Their story seems to be consistent that they're not going to release cars until they get approvals," he said.
O'Koniewski said that his organization has advised dealers to ask customers to voluntarily sign contingency agreements, meaning that customers would be obligated to pay back the dealer if the government rejected the trade-in. The government has repeatedly said that customers are not required to do so.
"Dealers, individually, have spent millions of dollars in inventory," he said. "They don't get these cars for free."
Dickinson said her dealer told her she could pay the $4,500 to pick up her new Honda, but she said she refused, and is still waiting.
But Paul Stone of Manchester-by-the-Sea said that his dealer "cut through paperwork pretty quickly" when he purchased a new GMC Sierra in July.
"It was a good deal all the way around," he said.
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