On Friday, July 31, voting 316-109, the US House of Representatives sent the US Senate a bill to pump an additional $2 billion into the "Cash for Clunkers" car purchase program, which exhausted its original $1 billion allocation in one week. The $1 billion budget for rebates on new car sales was officially launched on July 24, and has been heavily publicized by automakers and dealers.
The "Cash for Clunkers" program, called the Car Allowance Rebate System (CARS), is designed to help the US economy and environment by spurring new car or truck sales. Car owners can receive federal subsidies worth $3,500 to $4,500 to be applied to the purchase of new domestic or foreign cars that achieve significantly higher gas mileage. Congress last month approved the plan to boost auto sales and remove some inefficient cars and trucks from the roads.
The US House of Representatives members acted within hours of learning from Transportation Secretary Ray LaHood that the program was running out of money. House Majority Leader Steny Hoyer said the new money for the program would come from funds Congress approved earlier in the year as part of a $787 billion economic stimulus bill.
The US Senate is expected to take up the measure next week, while the White House would not make any promises for deals beyond the weekend. Praising the House's quick work, President Barack Obama said, "The program has succeeded well beyond our expectations and all expectations, and we're already seeing a dramatic increase in showroom traffic at local car dealers."
It was unclear how many cars were sold under the program, but Senator Debbie Stabenow said about 40,000 vehicle sales had been completed through the program but dealers estimated they were trying to complete transactions on another 200,000 vehicles, putting the amount of remaining funding in doubt.
Meanwhile, Ford Motor Co. will report a US sales increase in July, the first monthly gain year on year since 2007, as buyers took advantage of the government's "Cash for Clunkers" incentives.
Ford US sales chief Ken Czubay said, "The beginning of July was firming up for us and then a week ago last Friday the government's ‘Cash for Clunkers' program kicked in and there was a substantial increase in business and that kicked us over the top. We don't know about the others, but we do know that we are going to have an increase year over year."
The "Cash for Clunkers" program took effect a week before the end of the July sales period. Automakers will report their July US sales on Monday, August 3.