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Dealers, Detroit Look for Boost With ‘Clunkers’ Extension

The government's popular "cash for clunkers" incentive program -- aimed at replacing gas guzzlers with more fuel-efficient vehicles -- nearly exhausted its $1 billion budget in just days. Analysts look at who benefits from the program and its effects on the troubled U.S. auto industry.

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  • JUDY WOODRUFF:

    Next, the popularity of "cash for clunkers" and the push to extend the program.

    NewsHour correspondent Kwame Holman begins with some background.

  • KWAME HOLMAN:

    Following the House's lead, the Senate moved to pass a $2 billion extension of the program this evening. And for some dealers, that extra cash is critical.

  • CAR DEALER:

    We're just in limbo of what happens next.

  • KWAME HOLMAN:

    This Atlanta Chevy dealer says the program has been good for sales, but…

  • MARK FROST, Jim Ellis Chevy, Atlanta, Ga.:

    As of last night, there's a moratorium. We're not doing any more "cash for clunkers" deals until we get word that the Senate has approved the additional $2 billion.

  • KWAME HOLMAN:

    Right now, he says he's waiting for $800,000 worth of reimbursements from the government for his network of dealerships.

    The program, officially known as the Car Allowance Rebate System, or CARS, offers cash back for trading in vehicles that get less than 18 miles to the gallon. If the new car gets at least four miles per gallon better mileage than the old, a buyer nets $3,500, and a 10-mile-per-gallon increase earns $4,500.

    The improved mileage requirements are less strict for new light trucks.

    The $1 billion set aside for the program was supposed to last until November, but it has been so popular that the money was used up in a matter of weeks. The federal Department of Transportation says that, as of yesterday, the program took 157,000 vehicles off U.S. roads, many disabled and headed to the scrap heap.

    Dealers say that number is likely much higher. Many have had trouble filing paperwork with the government's computer system.

  • MICHAEL KALINOWSKI, Palmetto Ford, Charleston, South Carolina:

    I brought it home. And at 2 o'clock in the morning when I knew everybody on the West coast was going to be sleeping, I put all my stuff in.

  • KWAME HOLMAN:

    The program has been a boon for the big three American auto manufacturers. Of the new cars purchased through the program, 45 percent are made by General Motors, Ford, and Chrysler. The remainder are from foreign manufacturers, several of which produce those cars in the U.S. Six of the most popular replacement models are from Japanese companies, including the top seller, the Toyota Corolla.

  • JUDY WOODRUFF:

    For a closer look at the program to date and some of the questions surrounding it, we turn to Ed Tonkin, the vice chairman of the National Automobile Dealers Association, a trade group. His company has 14 dealerships in Oregon that sell domestic and foreign models. He joins us from Portland.

    And Bruce Belzowski of the University of Michigan's Transportation Research Institute.

    Gentlemen, thank you both for being with us. I'm going to start with you, Ed Tonkin. How well do you think this "cash for clunkers" program has done?

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