The US Senate will pave the way to release more funds for the government CARS ('cash for clunkers') programme by the end of the week, the majority leader promised last night.

Senator Harry Reid said legislation to inject more money would pass before the start of the month-long summer recess at the end of this week, according to Reuters.

Reid spoke after he and other Senate Democrats met with President Barack Obama to discuss expanding the clunkers programme and unrelated healthcare legislation.

The federal government originally allocated $1bn to the CARS programme but this was used up in about a week. The House of Representatives last Friday passed a bill allocating $2bn more but the move was expected to encounter resistance in the Senate as some senators thought the car industry was being given an unfair taxpayer-funded advantage ahead of other struggling sectors.

Opposition comments suggest the Senate vote is not going to be unanimous.

"What are we going to do after the US$2bn runs out?" asked Republican Senator Jim Demint of South Carolina. "The sales will drop off or are we going to spend another $5bn. Are we in the car business at the retail level forever?"

The uncertainty over additional funding prompted the National Automobile Dealers Association to warn members they processed further CARS subsidy applications at their own risk as reimbursement could not be guaranteed.

Sales rate rises as clunker fund exhausted