'Cash for Clunkers' is wildly popular
Mixed messages are the name of the game right now for the massively popular Cash for Clunkers federal voucher system for new fuel-efficient vehicles.
The program that was supposed to last for months exhausted it's funds in a week, and now Congress is funneling $2 billion extra into the program to keep it going.
A vote for the extra funds passed in the House of Representatives on Friday afternoon.
Area dealers are holding off on putting any more deals on paper for now, though, because they're not sure if the program has been officially suspended or not.
Rumors were flying Thursday night that the government was suspending the program at midnight, spurring sales statewide until the very last minute -- but whether some of those sales will go through is still in question.
While many deals have been approved nationwide, John Savageau, the general sales manager at Norseman Motors in Detroit Lakes, said he hasn't heard of any sales being approved in Minnesota, and is still waiting on their five pending deals to go through.
"It's been a mess," he said Friday morning.
Similarly, Brad Richards, co-owner of Nereson Motors, said simply, "We don't know."
Savageau said he'd heard from the Minnesota Auto Dealers Association Friday morning that the program had, indeed, been suspended, but Richards maintained that the National Auto Dealers Association was saying it was still on.
"Right now, we're still discussing the program with customers, and answering their questions, but we're holding off on any paperwork right now until we know for sure," Richards said.
As of Thursday afternoon, Nereson had 18 pending deals.
Savageau said Friday he didn't think Congress would push more money into the popular program, but Richards said it would be "excellent."
"This has gone better than anyone hoped it would," he said. "It is stimulating business."
Savageau had expressed earlier in the week that he expected the $1 billion in the program to go fast -- but on Friday morning, said he didn't expect it to be gone in four days.
Still, Richards said, when you do the math, it makes sense - 250,000 cars (the estimated amount to be sold under the program) doesn't last long when the industry is expected to sell between 9 and 10 million new cars this year.
Right now, it's unclear exactly how many cars have been sold under the program, partially because sales are backlogged in the computer database system being used - an overloaded system that both Richards and Savageau said has been frustrating to use.
However, both dealers were confident that their pending sales would be approved.
"I'm not worried about those, because they were in the system early," Savageau said.
"They just have to get their ducks in a row. If I had had a sale late last night, I would be worried."
At this point, he said, it's just a matter of paperwork.
But it's that paperwork that has made the program confusing for dealers in the first place - Savageau said the program document is 130 pages long, and very complicated.
"We've been going through a lot of hoop-jumping," he said. "We're not mad that it exists, it's just overly complicated to get the funding."
The Cash for Clunkers program, formally referred to as the Car Allowance Rebate System (CARS) was supposed to start on July 1, but dealers didn't have any specific program guidelines until July 24, so they didn't start making deals with the program until last week.
At that point, so many dealers were trying to access the website database for the program, that the system was overloaded. While they were waiting for approval, more and more piled up, which led the government to believe that they'd run out of money.
The $1 billion program was supposed to expire on Nov. 1 or when the $1 billion ran out.
It is designed to take 250,000 non-fuel-efficient cars off the road, and provide owners with either $3,500 or $4,500 off the purchase price of a new vehicle with better mileage.
It was never intended to sell cars, Savageau said, but rather, to improve the fuel economy on the road.
He said he'd heard that some dealerships were using special form contracts earlier in the week, when deals weren't being approved right away, that obligated the buyer to pay the dealer the amount of the rebate in case the government didn't come through.
The criteria of the program are very specific, though -- making it a "square peg in a square holed program. You either qualify or you don't."
The trade-in vehicle has to be manufactured after 1985, generally get an average fuel economy under 18 miles per gallon, and be continuously registered and insured for the past year.
The $3,500 or $4,500 is added as a credit at the time of purchase, depending on the fuel economy of the new car.
The traded-in vehicle is scrapped.
For more information on program specifics, go to CARS.gov.