WASHINGTON - The fate of the cash-for-clunkers program remained up in the air Monday even as sales figures from automakers demonstrated that people had flocked to dealers to trade in old gas guzzlers.
The White House urged the Senate to add $2 billion to the program, as the House voted to do last Friday before leaving for its August recess. Still, dealers around the country stopped promising the rebates to car shoppers on Monday, because of uncertainty about how much of the $1 billion initially allocated had been used up, or when or whether more money would be available. The Senate begins its recess this Friday.
The short-term tonic of the first billion dollars was evident, though, in sales figures that automakers reported Monday. New-vehicle sales rose last month to the highest level in nearly a year, and in the final week of July, cars and trucks were rolling off dealers' lots at almost the same rate they had before the recession began.
Dealers estimated that they sold a quarter-million cars with the rebate money.
And the Transportation Department reported that the average gas mileage of the vehicles being bought was significantly higher than required to qualify for a rebate of $3,500 to $4,500. Of 120,000 rebate applications processed so far, the department said the average gas mileage of cars being bought was 28.3 miles per gallon, for SUVs, 21.9 miles per gallon, and for trucks, 16.3 miles per gallon. Transportation Secretary Ray LaHood said some 80 percent of the traded-in vehicles are pickups or SUVs, meaning many gas-guzzlers are being taken off the road.
"The statistics are much better than anybody dreamed they would be," said Sen. Dianne Feinstein, D-Calif. Feinstein, along with Sen. Susan Collins, R-Maine, was the author of an early version of a cash-for-clunkers bill that would have required bigger improvements in mileage. Their decision to support the current version was an important signal to those concerned about whether the program was doing enough for the environment.
Although the House approved the funding by a nearly 3-to-1 margin last Friday, conservatives who have criticized it as another taxpayer bailout for the auto industry have much more leverage to block it in the Senate.
"We were told this program would last for several months. As it turned out, it ran out of money in a week, prompting the House to rush a $2 billion dollar extension before anybody even had time to figure out what happened with the first billion," said Senate Republican leader Mitch McConnell of Kentucky. He and other Republican senators are trying to tie the car program's troubles to the health care reform debate and Obama's stewardship of the economy.
"There's a pattern here, a pattern that amounts to an argument: ... When the administration comes bearing estimates, it's not a bad idea to look for a second opinion," McConnell said.
The program, formally known as the Car Allowance Rebate System (CARS), was meant to last until Nov. 1 or as long as the money lasted. But the program basically ran out of money within the first week as dealers submitted applications to the Transportation Department for a quarter-million cars they had sold in July.
The clunkers deal has been a double-edged sword for Minnesota car dealers. About 7,500 consumers bought new cars under the incentive, but so far, less than 2 percent of those transactions have gained final approval, according to a new survey by the Minnesota Automobile Dealers Association. The survey found problems with the approval process and the government's computer servers were sluggish.
Scott Lambert, vice president of the association, said that 40 percent of Minnesota car dealers have stopped offering the deal until more money is poured into the program.
Clunker deals made up 80 percent of new car sales for Walser car dealers last week, said Doug Sprinthall, Walser Automotive Group's new vehicle operations director.
"It's doing exactly what it's supposed to in the short term," he said. "But as for the administration of this program, I don't think they could have made it worse."
In Detroit, the automakers acknowledged sales were certain to drop off again when the trade-in program ended -- whether immediately or later this year -- and they conceded that there was a long way to go before the industry could climb out of its disastrous slump.
At the Ford Motor Co., sales rose 2.3 percent in July, the company's first year-over-year sales increase in nearly two years and the first for any of the six largest automakers since last August. Ford's Focus was the top seller among those who turned in a clunker to be scrapped, the government said.
Three other automakers -- Hyundai, Kia and Subaru -- also reported increases.
Star Tribune staff writer Alex Robinson and the Associated Press contributed to this report.