House approves $2B more for 'clunkers'

July 31, 2009 6:26:05 PM PDT
A federal stimulus program designed to boost the economy through new car sales is apparently too successful. The Cash for Clunkers program is running out of money because so many people ran in to dealerships to take advantage of it.

MOST POPULAR: Video, stories and more
SIGN-UP: Get breaking news sent to you

Response to Cash for Clunkers has turned out to be so strong, the program burned through $1 billion in a week. Two Bay Area dealerships say that each of them sold about 200 cars. But now, despite the House agreeing to $2 billion in additional funding, naysayers in the Senate could kill it. .

Dealers say they have not seen this many customers in months, all trying to beat a deadline that keeps slipping. They are driving in clunkers and looking to drive off with a fuel-efficient vehicle. People like Chuck Rufkahr of San Jose.

"There's been a lot of people on the lot today, absolutely," said Rufkahr. "I think people realize this might go away and they had to run down here and get it."

The uncertainty of additional funding to keep the program alive is hitting both customers with clunkers and with dealers.

While the president has said there is money to get through the weekend, Senate opposition is growing from both parties about joining the House in approving an additional $2 billion. The Senate will not convene until next week.

"At this point we've been told that deals through this evening qualify for the program, and we're still waiting to hear on deals for the rest of the weekend," said Piercy Automotive Group CFO Tom Chadwell.

The National Automotive Dealers Association is telling its members to proceed with caution, or else dealers may have to absorb the rebates, which are $3,500 or $4,500, depending on the clunker turned in and car purchased.

On top of that, the federal Web site that has to approve the deal is so overwhelmed by last-minute buyers that it is freezing up.

Piercy Toyota says it has a stack of deals waiting for approval.

Auto dismantlers say they have seen a flurry of activity, too. Dealers taking in the clunkers must disable them so they can't be driven. The engine is injected with a solution that causes it to seize up. Then the wrecker can salvage the parts.

"Yes, there'll be a market for the parts. Some of them are older, which ... you'll probably crush some of them and the newer models we'll take some parts off that we can sell," said Davie Pirnik with P&C Auto Wreckers.

Despite the glitches, customers say they are getting good deals.

"I traded in a car. I got $4,500 for a car I paid $4,000 for four years ago," said Rufkahr. "It had 220,000 miles on it, so I think I made a great deal."

As for those computer glitches holding up transactions, the Transportation Department hired a Bay Area company, Oracle, to handle the computer system. Oracle is not commenting about the problem.

       Today's latest headlines | ABC7 News on your phone
Follow us on Twitter | Fan us on Facebook | Get our free widget


Load Comments