You are here: Home» Economic Issues» World

US Government Agrees to Expand 'Cash for Clunkers' Program as Sales Soar  

Adjust font size:

The US government has agreed to expand the "cash for clunkers" program to vehicles already in the production pipeline as deals under the program soared in the last few days, reports reaching Chicago said on Friday.

US car buyers had been limited to fuel-efficient vehicles in showrooms and on lots, and some dealers reported shortages. The US Transportation Department's decision to expand it came just days after a request by Michigan lawmakers who said it would increase consumers' choices and encourage more to take advantage of the incentive program, which already has spurred a dramatic increase in vehicle sales.

Some foreign automakers had opposed the expansion, saying it would create "confusion" among dealers and consumers.

Ford Motor Co. announced Thursday that it is boosting production at a number of factories to keep up with the demand.

The company said it saw no signs of abating interest in the program, and warned that the US$3 billion Congress allocated for it would likely be exhausted in about three weeks. That was before the government announced the expansion, meaning the "cash for clunkers" program could run dry even sooner.

"The Department of Transportation is trying to make sure that everyone who wants to can participate in this wildly successful program," said Transportation Secretary Ray LaHood.

Two of Michigan's Republican members of Congress Fred Upton and Candice Miller urged the federal government to allow customers to order vehicles and not be limited to those on the lots.

Not all automakers like the change. Mike Stanton, chief executive of the Association of International Automobile Manufacturers, which represents foreign carmakers, said the change could open the door to fraud.

About 340,000 vehicles have been purchased under the program, with about 20,000 new sales submitted each day this week. Between June 22 and Tuesday, nearly 13 million hits had been registered at a government Web site detailing the program.

The program, officially known as the Car Allowance Rebate System, gives consumers vouchers for up to US$4,500 for turning in vehicles of up to 25 years old and with a fuel efficiency of 18 miles per gallon or fewer, and buying more fuel- efficient models.

The Obama administration originally allocated US$1 billion for the program, but added US$2 billion after unexpectedly strong demand threatened to burn through that in the first week.

(Xinhua News Agency August 15, 2009)