US puts brakes on ‘cash for clunkers’ before it starts running on fumes

The White House has hailed the program’s success in providing a targeted boost to the sluggish economy since its inception in late July. Through yesterday, auto dealers had made deals worth $1.9 billion, and the incentives had generated more than 457,000 vehicle sales.

But the administration needed to put a halt to the program to avoid surpassing the $3 billion funding level. Consumers were on pace to exhaust the program’s coffers in early September, and dealers have complained about long delays in getting reimbursed for the car incentives.

John McEleney, chairman of the National Automobile Dealers Association, said he remained concerned that so few dealers had been reimbursed for clunker deals. But he said the Monday deadline should give dealers time to get their paperwork in order.

“I think if we can get a clean cutoff Monday and get everything processed by then, it will have been a pretty darned successful program,’’ he said.

But Mike Mahalak, who runs a Dodge, Chrysler, and Jeep dealership in Winter Haven, Fla., said the Monday end date could lead to a similar rush that nearly crippled the federal government’s computer systems that were set up to handle claims.

“That website will lock up again once everyone is cramming it again on Monday,’’ Mahalak said. The administration has said it expanded the capacity of the computer network in an effort to improve the process for dealers.

The Transportation Department said it has reviewed nearly 40 percent of the transactions and has already paid out $145 million. Obama administration officials said there are no plans to seek additional funding.

Applications for rebates will not be accepted after Monday, administration officials said, and dealers should not make additional sales without receiving all the necessary paperwork from customers. Dealers will be able to resubmit rejected applications after the deadline.