'Clunker' Vouchers Now Apply to Out of Stock Vehicles

The Obama administration eased the rules of its "cash for clunkers" program Thursday, saying it would let consumers order autos that dealers don't have in stock.

It also tried to reassure dealers who say the government isn't reimbursing them on time.

Thursday's efforts represent the administration's latest on-the-fly fixes to its month-old Car Allowance Rebate System, which gives consumers who trade in low-gas-mileage cars a $3,500 or $4,500 credit on a new one.

The plan's popularity, plus confusion among dealers over its rules, has contributed to administrative gridlock. The Department of Transportation, which runs the program through its National Highway Traffic Safety Administration, indicated to auto dealers Thursday that it would add staff to address the backlog of unpaid applications for clunker vouchers.

Dealers say the government is putting them in financial peril. The law requires dealers to deliver a new vehicle to qualifying customers, even if the government payment hasn't yet arrived. The government says it will reimburse dealers within 10 days of the applications' approval.

But dealers say payments have been slow to arrive. "We've got 155 clunkers on the ground and no money in the bank," says Earl Stewart, owner of the Earl Stewart Toyota dealership in North Palm Beach, Fla. "We're selling ourselves into a very negative cash-flow situation."

With dealers on average earning about $1,000 on a new-car sale, most face a loss on each transaction until the government pays up. Mr. Stewart says the government owes him $672,700 in rebates and hasn't paid any. "The more cars I sell, the worse it gets."

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