"Cash for Clunkers" sputters to a halt

       The federal government will end its popular "cash for clunkers" programme on Monday, more than two months early, because it is already running out of money.
       The sudden halt means that newcar showrooms are likely to be flooded by last-minute shoppers over the weekend. Dealers have until 8 p.m. on Monday to submit the 13-page application to be reimbursed for the rebates they are giving out under the programme.
       Although the programme has brought on a welcome surge in demand for cars after months of dismal sales, some dealers will be glad to put it behind them because it has been plagued by confusion and processing delays.
       General Motors on Thursday told dealers that it would give them cash advances on money the government owed them to keep them from dropping out, as some have already.
       The programme, formally known as the Car Allowance Rebate System, or Cars, gives consumers a credit of up to $4,500 toward the price of a new car or truck if they turn in an older vehicle with lower gas mileage. It has generated more than 457,000 sales since July 24,prompting GM, the Ford Motor Co and other automakers to increase factory output and call back some idled workers.
       "It has been successful beyond anybody's imagination," President Barack Obama said on Thursday in a radio interview with the syndicated talk show host Michael Smerconish."And we're now slightly victims of success because the thing happened so quick,there was so much more demand than anybody expected, that dealers were overwhelmed with applications."
       As of Thursday, the Transportation Department had repaid dealers just $145 million, or 7% of the $1.9 billion that they had requested, leaving many squeezed and prompting some to withdraw from the programme early.
       The government is tripling the size of the workforce assigned to handle the applications.
       In many cases, the administration says incomplete forms or errors in the information submitted by dealers are slowing the process. Workers have reviewed about 40% of the applications filed, and many have been rejected and then returned to the dealer for possible resubmission.
       Laura Sodano, a sales manager at Curry Chevrolet in Scarsdale, New York,said dealers were not told why their applications had not been approved and were having to review the entire form to determine what went wrong.
       "I don't know one dealership that's gotten paid yet," Sodano said."If they run out, we're in trouble. It's bringing us a lot of traffic, but it's not a very good programme."
       Among consumers, the programme has created far more interest than experts had predicted. It was initially given $1 billion of funding, enough for about 250,000 sales, and an end date of Nov 1. That money was used up in a little more than a week, and Congress quickly approved $2 billion more to extend it.
       Transportation officials say they believe reimbursement requests of about $400 million on completed sales have yet to be filed, leaving about $600 million in credits still available for the final weekend, after removing $100 million for administrative costs.
       If the funding is exhausted before all reimbursements are made, some dealers - and possibly GM - could end up having to write off the unpaid credits.The administration does not plan to seek a third installment of funding.
       GM made the decision to give dealers cash advances late Wednesday, though officials said earlier that the company was "not in a position" to do so.
       "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," said Mark LaNeve, GM's vice president.