The government has approved $500 million in reimbursements to car dealers for sales under the Cash for Clunkers program and dealers should be paid by late September, officials said Thursday.
Auto dealers have complained that the Obama administration has been slow to pay them for the car purchase incentives of up to $4,500. The rebates led to 690,114 new sales at a taxpayer cost of $2.88 billion.
A Transportation official said 120,000 submissions from dealers, or about 17 percent, have been approved under the program, which ended on Aug. 24. The official, who spoke on condition of anonymity, was not authorized to speak publicly about the data before a congressional briefing.
All eligible and completed dealer submissions should be fully paid by Sept. 30, the official said. The official said the government is ramping up staff and 5,000 workers will be reviewing paperwork by the end of next week. About 3,000 government and private sector workers are currently working on the project.
The official said the department expects to be approving $100 million per day by the end of next week. Department officials told congressional aides that dealers should be reimbursed within 3 days of their deals being approved.
The program, which provided incentives of $3,500 or $4,500 for consumers to trade in a gas-guzzler for a new, more fuel-efficient car or truck, boosted car sales during the summer. U.S. auto sales rose to 1.3 million vehicles in August, a 30 percent increase from July and the first monthly year-over-year gain since October 2007.
Auto dealers have said the delays have squeezed their businesses, leaving them on a short-term hook for dozens of deals. AutoNation Inc., the nation's largest dealership chain, said Wednesday it was owed more than $54 million from clunker sales and expected to get paid in 30 to 60 days.
Bailey Wood, a spokesman for the National Automobile Dealers Association, said that "while dealers are still floating billions of dollars related to this program on top of their dealerships, we see the new numbers as a step in the right direction." He said the dealership group was encouraged by the Sept. 30 deadline.
Cody Lusk, president of the American International Automobile Dealers Association, said many dealers have been waiting for their reimbursements for more than six weeks. "Cash flow is the lifeblood of small businesses. Without it, dealerships can't take care of their day-to-day expenses — like employee pay."