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Cash for Clunkers Causing Car Shortages

With the U.S. Senate considering a vote on putting more money into the government's "Cash for Clunkers" program, some auto dealers are raising concerns about a new threat to the incentive program: tight inventories.

The clunker program, which offers subsidies of as much as $4,500 to consumers who trade in older vehicles and buy new, more fuel-efficient models, sparked a surge in sales in late July, leaving many dealers with lean stocks of cars and trucks on their lots.

If Congress moves ahead and allocates more money for the trade-in plan, light inventories could hinder sales and damp the program's impact until auto makers are able to rush vehicles to dealerships.

Galpin Ford in North Hills, Calif., the country's largest Ford dealership by sales, is running low on Escape crossovers and Focus compacts, general manager Terry Miller said Tuesday. The Focus is the top-selling model under the clunker program, and the Escape is among the top 10 best-sellers, according to the Transportation Department.

It's a similar story in the Philadelphia metropolitan area, where a Dodge dealership and a Chrysler-Jeep store owned by David Kelleher are out of Jeep Wranglers and Jeep Patriots, and are nearly out of Dodge Avenger sedans.

"We've got an inventory issue," Mr. Kelleher said.

Chrysler's stocks are tighter than those of most other auto makers because the company shut down all its plants while it reorganized in bankruptcy court in May and part of June, and shipments to its franchises ground to a halt.

Still, Toyota Motor Corp. only had enough Prius hybrids in stock at the end of July to last 13 days at the current rate of sales, according to Autodata Corp. It had a 34-day supply of Corolla compacts and a 37-day supply of Camrys.

Click here for more on this story from The Wall Street Journal