Fed Ultimately Denies More Than 12,000 CARS Applications

WASHINGTON, D.C. — Transportation Secretary Ray LaHood recently reiterated his praise for the success of last year's Cash for Clunkers program. This time, LaHood's comments came as a reaction to positive reports from the DOT Office of Inspector General and the General Accounting Office.

Federal officials believe Cash for Clunkers successfully completed its top objectives set out by Congress: stimulating the economy and aiding the environment through increased vehicle sales and reduction of older, less fuel-efficient vehicles on the roads. In fact, they contend the program resulted in a 60-percent improvement in fuel economy between the trade-in and new vehicles purchased.

According to the report, more than 18,908 dealers participated in the CARS program. As a result, 690,114 voucher applications were filed and reviewed by the National Highway Traffic Safety Administration, which administered the program.

NHTSA officials stressed that they worked with dealers to correct and complete all applications that were received, ultimately approving 677,842 transactions and denying 12,272 applications.

The administration added that more than 99 percent of CARS program rebates were approved and paid under the program for a total of more than $2.8 billion.

"Cash for Clunkers was wildly successful," LaHood emphasized.

"In a matter of weeks, Americans traded in nearly 700,000 gas-guzzlers for more fuel-efficient cars, improving the environment and providing a lifeline to the auto industry," he continued.

"Our program was a win for everyone, and most importantly it gave the economy a shot in the arm at a time when we desperately needed it," LaHood added.

Federal officials also shared more data about the Cash for Clunkers, including brands that were traded and top brands purchased through the program. 

                                
NHTSA emphasized it was able to keep administrative costs to a bare minimum — less than 3 percent of the program cost. Officials made the claim based on implementing a strong, multi-tiered approval system to ensure transactions were complete, legitimate and in compliance with program requirements.

Federal officials learned more through an internal audit of 1,200 of the 677,842 transactions. They found a completion rate of 99.96 percent.

The administration went on to note that the OIG report demonstrated a similar rate of success but based on the smaller sample of 393 transactions.

Of the 13 that the OIG identified as incomplete at the time of their review, NHTSA said it has since worked with dealers to complete the documentation in every single case.

In a letter written as a response to the OIG findings, top NHTSA administrator David Strickland echoed a similar stance to LaHood. Strickland reiterated how Cash for Clunkers served as a lifeline to all involved, especially dealers and automakers.

"The nation's economy benefited immediately from this stimulus program, which caused a distinct upward movement in GDP and created or saved tens of thousands of jobs at a very critical time in the recovery process," Strickland wrote.

"Because of the unanticipated strength of consumer response, the program led to a sharp decline in dealer inventories and caused several major automakers to increase production schedules through the end of 2009, leading to an increase in employment and GDP in the fourth quarter as well," he went on to emphasize.

"The environment will benefit over the longer term because operation of the new vehicles in place of the trade-ins will reduce oil consumption and emissions of carbon dioxide and related greenhouse gases over the next 25 years," Strickland added.