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‘Cash for Clunkers’ ends Monday

Washington is putting the brakes on the wildly popular "Cash for Clunkers" program after this weekend.

Washington is putting the brakes on the wildly popular "Cash for Clunkers" program after this weekend.

U.S. Transportation Secretary Ray LaHood announced today that the program, also known as the Car Allowance Rebate System, would end at 8 p.m. Monday because the $3 billion allotted for trade-ins has largely been depleted - two weeks earlier than expected.

It had been anticipated that "Cash for Clunkers" would run until Labor Day.

"It's been a thrill to be part of the best economic news story in America," LaHood said. "Now, we are working toward an orderly wind down of this very popular program."

Under "Cash for Clunkers," consumers are given credits of either $3,500 or $4,500 for turning in certain gas-guzzling, environmentally unfriendly vehicles and buying new, more fuel-efficient ones. The credits go toward the purchase price of the new vehicles.

Dealers are reimbursed for the credits by the National Highway Traffic Safety Administration, which is administering the program.

LaHood said the Monday night deadline would allow car dealers and buyers plenty of time to finalize purchases and submit applications for rebates from the remainder of the $3 billion total appropriation.

Rebate applications will not be accepted after 8 p.m., he said, and dealers should not make further sales without receiving all the necessary paperwork from their customers. Dealers will be able to resubmit rejected applications after the deadline.

The Transportation Department is continuing to expand the number of people processing dealer applications under the program, LaHood said. Last week, the agency added 1,000 employees to handle the volume.

Twice now, "Cash for Clunkers" has exhausted its allotted funds earlier than projected.

The initial $1 billion set aside for the program was depleted within a week of its July 24 debut, well ahead of the projected November deadline, forcing Congress to act fast to keep it going.

By Aug. 6, both the U.S. House and Senate had fast-tracked an additional $2 billion before breaking for summer recess. That supplemental funding was expected to keep "Cash for Clunkers" going into September.

"It shows you how successful the program has been," said Kevin Mazzucola, executive director of the Auto Dealers Association of Greater Philadelphia, which represents more than 200 dealerships. "The bottom line is that they are ending it on Monday to ensure there is enough money to pay claims by the dealers for the deals getting done.

"The dealers better batten down the hatches, because it will be a very busy weekend with car purchases," Mazzucola said.

Through today, auto dealers nationwide had made deals worth $1.9 billion in rebates - more than 457,000 vehicle sales - and were on pace to exhaust the program's $3 billion. Administration officials said they had reviewed nearly 40 percent of the transactions and had paid out $145 million to dealers.

LaHood said most buyers had exchanged trucks and SUVs for passenger cars, with an improved gas mileage of about 60 percent.

For the ailing U.S. auto industry, and for many local dealers, "Cash for Clunkers" became a saving grace.

"It helped the consumer, the retailer, and the worker because they are going back to work to make more cars because the inventory has been depleted," Mazzucola said.

Both General Motors Co. and Ford Motor Co. are ramping up production, adding shifts and rehiring laid-off workers.

Among the program's happy customers is Raymond V. Monczka, 64, of Royal Oak, Mich. Monczka bought a new Ford Focus this month and traded in his 2001 Jeep with 270,000 miles.

"Guess what? I filled the new Focus today, and my mileage was 34 miles to the gallon," he said in an e-mail this week. "Tell those senators in Washington that the program got me to buy a new car, plus it is saving gas, which in the long run is doing what it was designed to do."

In an interview today with Philadelphia talk radio host Michael Smerconish, President Obama said that the program had been "successful beyond anybody's imagination," but that dealers were overwhelmed by the response.

He also pledged that dealers would be paid.

"They will get their money, but we've got to process it properly," Obama said.

Dealers have complained of delays in being reimbursed and backlogs in processing vehicle paperwork for the program.

Senate Majority Leader Harry Reid (D., Nev.), who was instrumental in shepherding through the vote for the additional $2 billion in program funding, wrote LaHood today and urged that the Transportation Department consider a policy that would reimburse dealers within five business days for all properly submitted vouchers.

John McEleney, chairman of the National Automobile Dealers Association (NADA), said his group would continue to work with federal transportation officials to reduce the backlog of pending applications and ensure that all dealers are reimbursed for valid deals.

"With a [deadline] date certain, NADA is strongly recommending that all dealers now focus their attention and efforts on submitting reimbursement claims," McEleney said.

Chrysler Group L.L.C. and GM said today that they would begin providing cash advances to dealers to help cover shortfalls related to the program.

Already, some dealers are no longer participating. Melanie Bible, spokeswoman for the Pennsylvania Automotive Association, said about half the state's 950 dealerships had stopped cutting new "Clunkers" deals.

Others were simply out of cars, like Sport Chrysler Jeep in Norristown.

"We ran out of almost everything," general sales manager Dennis Crilly said tonight. "It's been real hard this past week because we had very few cars."

Crilly said the dealership just got a shipment today of 2010 Chrysler Town and Country LXT minivans and Dodge Caravans after selling out of them last week.

"This will help for the final weekend," he said.

For others, new-car sales have continued to be robust.

"As of today, we have delivered 625 new cars to 'Clunker' customers," said Mike Hammond, vice president of sales and marketing for Conicelli Autoplex, which owns five dealerships in Montgomery and Delaware Counties. "We will probably deliver 100 more between today and tomorrow.

"August 2009 will go down as the best retail sales month in the history of Conicelli Autoplex."