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'Cash for clunkers' rides high


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POSTED: Tuesday, August 04, 2009

WASHINGTON » The popular but overwhelmed “;cash for clunkers”; program is zooming toward a quarter-million trade-ins with the initial $1 billion in rebates, but the White House warns the special deals could sputter to an end by Friday unless the Senate quickly approves $2 billion more.

Senate skeptics appear to be in no hurry.

Yesterday the Obama administration pointed to environmental gains made during the first week of the program, which gives rebates of as much as $4,500 to motorists who trade in gas guzzlers for more fuel-efficient vehicles. The White House also highlighted recovery news from Ford Motor Co., which reported its first U.S. sales increase in nearly two years.

“;It's good for consumers. It's good for dealers and auto manufacturers,”; White House spokesman Robert Gibbs said. “;It's good for our energy security and our environment.”;

Gibbs said if the Senate failed to provide the extra money, “;it's unlikely that we'll make it to the weekend with a program that can continue.”; He estimated the additional $2 billion would allow consumers to take advantage of the incentives through September.

In the Senate, Democrats remained concerned about lining up enough support for the plan, which the House approved last week before heading home for the August recess. “;I'd like to see the program extended,”; said Dick Durbin of Illinois, the Senate's second-ranking Democrat. “;I hope we can get it done.”;

While the House approved the funding by a nearly 3-1 margin last Friday, the “;clunkers”; program faces strong head winds from conservatives who view it as another taxpayer bailout for the auto industry and environmentalists who complain that it ought to wring out more fuel efficiency. There's little time left on the calendar—the Senate plans to take a four-week recess beginning Friday after it votes this week on Sonia Sotomayor's nomination to the Supreme Court.

Despite the assurances from the White House, many dealers said they were concerned they could be on the hook for some of the money if the Senate fails to approve the $2 billion. John McEleney, chairman of the National Automobile Dealers Association, said his organization was warning dealers there were no guarantees they would be reimbursed for sales they make under the program this week. McEleney said he has stopped offering “;cash for clunkers”; deals at his own Iowa dealerships.

Transportation Secretary Ray LaHood said the average mileage of new vehicles purchased through the program is 9.6 miles per gallon higher than for the vehicles traded in for scrap. Buyers of new cars and trucks that get 10 mpg better than their trade-ins get the $4,500 rebate. People whose cars get between 4 and 10 mpg better fuel efficiency qualify for a smaller $3,500 rebate.

LaHood said some 80 percent of the traded-in vehicles are pickups or SUVs, meaning many gas guzzlers are being taken off the road. The Ford Focus is a leading replacement vehicle. General Motors Co., Chrysler Group LLC and Ford accounted for 47 percent of the new vehicles purchased.

Ford said its July sales rose 1.6 percent in July from the same month last year, its first year-over-year increase since November 2007, while Chrysler Group LLC posted a smaller year-over-year sales drop compared with recent months, helped by “;clunkers”; deals. Other automakers showed gains, giving ammunition to supporters of the car rebate program.

Senate Republicans appeared to be in no hurry.

Sen. Jon Kyl of Arizona, the Senate's second-ranking Republican, suggested lawmakers “;take a timeout”; so they could receive more details about the program before providing more money.