Automakers to Guarantee 'Cash for Clunkers' Claims Following Dealer Complaints

Eight months after the federal government stepped in to bail out U.S. auto giants, the beleaguered companies are turning the tables and helping the government bail out itself.

Major auto manufacturers have stepped up to guarantee their dealers' "Cash for Clunkers" transactions, following complaints that thousands of dealer claims have been delayed or rejected by the federal government.

General Motors announced Thursday that it will immediately start providing "cash advances" to dealers equivalent to the rebates that are being processed, and will do so for the duration of the program. The Transportation Department said Monday will be the last day.

"We want to do all we can to provide customers with timely new vehicle deliveries and dealers the liquidity they need to run their businesses. This will continue the sales momentum of our new fuel-efficient vehicles such as the Chevrolet Cobalt, Equinox and Buick Enclave," said Mark LaNeve, vice president of U.S. sales, reporting that GM's sales are up thanks to the program.

A White House spokesman said Toyota and others have also stepped up to guarantee the rebates so that dealers can continue the program.

There is a considerable backlog in Washington after Congress increased the size of the $1 billion program by another $2 billion. The Department of Transportation has reviewed 167,000 of the 458,000 applications it has received through the popular trade-in policy, according to the official.

The administration recently announced that it will triple the size of its staff reviewing the claims to 1,100, so that dealers can be paid more promptly.

White House Press Secretary Robert Gibbs stressed this development Thursday, and said the large number of claims shows that "Clunkers" is "without a doubt an unqualified success."

But in the meantime, dealers have complained that not only are their applications being held up, but many are being returned to them on technical grounds.

Rep. Joe Sestak, D-Pa., recently wrote to President Obama warning that a failure to fix the problem would "undoubtedly" force many dealers out of business.

The White House spokesman said that applications that were incomplete or inaccurate had to be returned, or else the government would have been processing claims in violation of the law. The spokesman said the administration held Web seminars and provided detailed instructions in an attempt to avoid incomplete applications.

Under the Clunkers program, passenger car owners are eligible for a voucher worth between $3,500 and $4,500 if they trade in their gas guzzlers for new, fuel-efficient vehicles.

Transportation Secretary Ray LaHood on Wednesday assured dealers that they will be reimbursed.

He acknowledged that they are "frustrated," but said, "They're going to get their money."

FOX News' Mike Emanuel contributed to this report.