The US government has said it will suspend its ‘Cash for Clunkers’ program as the program’s US$3bn budget has run dry.
The program will end at 20:00hrs on August 24, by which time all applications for the rebates must be submitted.
The scheme has provided a considerable temporary boost to sales in the US market this month and JD Power estimates that the month of August will see a recovery of the US total light vehicle market’s seasonally adjusted annual running rate (SAAR) to 12.2m units.
However, there are concerns that the scheme merely brought forward sales and that its ending may result in a market drop.
The Transportation Department said it thought enough money would be left to continue accepting submissions until the Monday deadline, based on conservative estimates of valid transactions to date.
Dealers have worried that the program will run out of money before they are reimbursed for discounts given to car buyers on qualifying transactions.
A New York dealership group has said that hundreds of its members had stopped doing clunker transactions because of delays in getting reimbursed by the federal government.
Addressing dealer concerns, GM has said it will provide cash advances to dealers to cover clunker rebates while they are being processed by the government, which has had difficulty keeping up with the volume of consumers drawn to the program.
The cash advances are intended to provide liquidity to dealerships while they wait to be reimbursed by the government, GM said.
“Our sales performance in the past two months has exceeded our internal forecast by over 60,000 vehicles, largely driven by the CARS [clunkers] stimulus program,” said Mark LaNeve, VP of U.S. Sales.
“We want to do all we can to provide customers with timely new vehicle deliveries and dealers the liquidity they need to run their businesses. This will continue the sales momentum of our new fuel-efficient vehicles such as the Chevrolet Cobalt, Equinox and Buick Enclave.”