Government scrambles to avoid Cash for Clunkers suspension

By Jennifer Liberto and Peter Valdes-Dapena, senior writers

NEW YORK ( -- This much seems certain about the Cash for Clunkers program: Consumers are happy to take government rebates to buy new cars.

Other than that, confusion reigned Friday morning.

The fate of the $1 billion trade-in program was up in the air over concerns that it may have already burned through its funds less than a week after it was officially launched.

And it was unclear how much longer car buyers would be able to trade in clunkers after reports surfaced on Thursday night that the program would be suspended.

On Friday, the Obama administration said it was working with Congress to try to get more money and that Clunkers deal certificates would be honored through the weekend.

"The program will be in place" for anyone who had been planning to make a car purchase this weekend, White House spokesman Robert Gibbs told CNN. "This program appears to be a success for car buyers, car dealers, car companies and taxpayers."

One of the program's main champions in Congress, Sen. Debbie Stabenow, D-Mich., told CNN that the Michigan, Ohio and Indiana congressional delegations are working on a $2 billion extension of Clunkers program.

Stabenow had said the effort has provided an important boost to the economy and resulted in 200,000 car sales.

"I am delighted to hear dealers say that all of their salespeople are busy and they are selling more cars in a day than they had been selling in a month," Stabenow said.

Meanwhile, the Transportation Department was sorting out how much of the plan's funds have already been committed.

Cash for Clunkers, which Congress passed in June, is set to end on Nov. 1 or whenever its $1 billion budget has been depleted. An early version of the Clunkers proposal before it passed Congress called for appropriating $4 billion.

On Friday morning, the government's official Web site, set up to provide dealers and consumers with information about the plan, still showed $780 million remaining in the coffers.

But many deals are still waiting to be processed, according to dealers.

Brian Benstock, president of Paragon Honda in New York City, N.Y., said his dealership had already written 60 Clunker deals since July 1, the earliest date from which deals would be accepted.

One deal was signed at 11:55 p.m. last night, Benstock said, after reports had circulated indicating that the program might be suspended.

"We're telling the customer, 'We're the only dealer open on Northern Boulevard. You're got four minutes,' " he said.

The customer traded in a an old Mitsubushi Diamante sedan for a new Honda CR-V crossover SUV.

Benstock said he was surprised to hear the program might have reached its limit already. Like many dealers, he said, he had already purchased advertising in Friday's newspapers and he had sent out 176,000 direct mail cards to owners of qualifying Clunkers in his area.

"Can you imagine the position we were in last night?" he said. "We had 176,000 missiles in the air and we're hearing it's cancelled."

Bob Goldberg, general manager of Premium Nissan in New Rochelle, N.Y., said he had already given discounts totaling $27,000 on six Clunker deals when he heard the reports late Thursday.

"I didn't sleep at all last night," Goldberg said. "I feel terrible. All of a sudden the money's gone. It's a little nerve wracking."

Under the plan as enacted, vehicles purchased after July 1 will be eligible for refund vouchers worth $3,500 to $4,500 on traded-in gas guzzlers. The trade-in vehicle has to get combined city and highway fuel economy ratings of 18 miles per gallon or less.

The program aims at helping the struggling auto industry by taking inefficient cars off the road and spurring new sales.

"With this program, we are giving the auto industry a shot in the arm and struggling consumers can get rid of their gas-guzzlers and buy a more reliable, fuel-efficient vehicle," Transportation Secretary Ray LaHood said in a statement Monday.

Domestic auto sales have been hit hard by the recession and credit crunch and helped propel the bankruptcies and government bailouts of General Motors and Chrysler. In June, the seasonally adjusted annual sales rate fell to 9.7 million, a pace well below recent years. staff writer Aaron Smith and CNN's Ed Henry contributed to this report.

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