Cash For Clunkers Suspended - UPDATE: Ended
AUGUST 24, 2009
The Cash for Clunkers program has officially ended.
AUGUST 07, 2009 - 1130 EST
The Senate voted 60 to 37 yesterday to extend the Cash for Clunkers tax credit and replenish the funding with an additional $2 billion. This will provide enough funding for an estimate half million additional car purchases. It is estimated that this funding will last through Labor Day in early September.
Given the popularity of the program with the public, it was not really a surprise that this bill was passed without changes. Several senators wanted to take this opportunity to make the bill more stringent or add amendments, but doing so would have essentially killed the bill. With the House of Representatives on summer recess, they would not have the opportunity to vote on the changes until September, which would have been too late for the program.
What's not to like about the bill, that is, for those who are able to take advantage of it? The government is giving away free money. For those of us that are unfortunate not to qualify, we can't help but feel left with a bitter taste in our mouths... as an environmental bill this gets a failing grade of F. As a stimulus to the auto industry, it gets an A+.
JULY 31, 2009 - 1530 EST
The House of Representatives voted to extend funding for the Cash For Clunkers program by pushing an emergency appropriations bill to vote that provides an additional $2 billion in order to keep the program alive.
It is expected the the Senate will take the measure to a vote next week when they are back in session. It will be interesting to see if the bill gets pushed through as is because some senators are calling for tougher restrictions on the fuel economy requirements. If the Senate doesn't pass the bill as is, it would mean that the House would have to return from break to come up with a compromise and take the bill to a vote.
I'm not certain how dealers will respond to this news immediately. Some may continue to honor cash for clunkers trade ins during this flux and backlog the paperwork. Others may choose to wait and see what the fate of the bill is before accepting more cash for clunkers trade-ins. Stay tuned!
JULY 30, 2009 - 2300 EST
The Associated Press is reporting that the popular cash for clunkers program is being suspended Thursday, July 30 at midnight. The reason is that there are concerns of having already depleted the $1 billion that Congress approved for the program. If you've been living under a rock, this is the government program to incentivize the purchase of new more fuel efficient cars by trading in eligible "clunkers" for a credit of $3500 or $4500... a pretty good deal on a car that may have a trade-in value for considerably less. For more details on the program visit this cash for clunkers tax credit hub and some sample fuel efficient cars to maximize your tax credit.
The cash for clunkers program only went into effect this past Friday (July 23), but due to all the publicity and promotion thousands of people flooded the show room floors to cash in on the deal. A survey of 2000 dealers nationwide suggested that there are 25,000 vehicles backlogged in the system - that's an average of 13 cars per dealer. There are an estimated 23,000 dealers participating in the program. Do the math and you come out to nearly 300,000 vehicles. That's great for the car dealers and manufacturers, but Congress only budgeted $1 billion for the deal, which comes out to approximately 250,000 cars!
What's this mean to the car buyer?
Well, at this point it's unclear what's going to happen. If you haven't already taken advantage of the cash for clunkers program, and you were hoping to - you're too late! Dealers will be happy to take your money for a new car, but don't expect the tax credit be subtracted off the top.
If you already purchased a car under the program, you should be safe as far as I can tell. I know one person who purchased a vehicle under the cash for clunkers program, and the dealer called them tonight requesting that they come back in and sign additional paperwork. I'm uncertain what this additional paperwork may be, but I cautioned them to review it carefully to ensure that they are not assuming liability in the event that the cash for clunkers credit falls through. I am not otherwise aware of any conditions of sale based on the successful processing of a cash for clunkers tax credit. If anyone has had any experiences with dealers trying to back out from the cash for clunkers program or trying to pull a quick one on you, I'd be interested in hearing your experience in the comments section.
The Future of CARS
Simply stated: TBD. We're not quite sure what's going to happen, but stay tuned.
Some people are calling for an extension of the program. It could be argued that this program was the quickest infusion of cash into the economy. The $1 trillion stimulus package has taken months and months to get the dollars obligated by local and state governments. This $1 billion stimulus was spent in less than a week since the official launch! Not only did it get qualified buyers into the showroom making purchases, it got the rest of America thinking about buying a new car whether eligible or not. From the perspective of stimulating car sales, this was one government program that actually accomplished what it was intended to do. We'll see what happens next!