Far more drivers signed up for the "cash for clunkers" program than anyone thought, overwhelming showrooms, blowing through the initial $1 billion set aside by Congress and leaving dealers panicked over when or if the government would make good on the hefty rebates.
Confusion reigned, even as dollars flowed into dealerships starved for business for months.
The government Web site set up to process rebates of up to $4,500 per new car could not keep up with demand. Washington scrambled to come up with more cash and sent mixed signals about how the program would unfold.
"A borderline train wreck," said Charlie Swenson, general manager at Walser Toyota in Bloomington, Minn. In Glen Burnie, Md., Bob Bell, who owns Ford, Kia and Hyundai dealerships, said his employees were overwhelmed filing for reimbursement from the government's clunky system.
He compared the program to a military operation: "It is a disaster," Bell said. "We met our objective, but the losses were terrible."
The House voted Friday to replenish the program with $2 billion, setting up likely Senate action next week. Sen. Carl Levin, D-Mich., said the administration assured lawmakers that "deals will be honored until otherwise noted by the White House."
Like a car salesman beckoning from the lot, Levin said "people ought to get in and buy their cars" while the hot deals last. The White House joined in the pitch, telling consumers the program is solid through "this weekend." That left unclear what happens after that, until more money is approved for it.
The Car Allowance Rebate System offers owners of old cars and trucks $3,500 or $4,500 toward a new, more fuel-efficient vehicle, in exchange for scrapping their old vehicle. Congress last month approved the plan to boost auto sales and remove some inefficient cars and trucks from the roads.
It was unclear how many cars had been sold under the program on Friday, but the number was far higher than anyone had expected. About 40,000 vehicle sales were done through the program but dealers estimated they were trying to complete transactions on an additional 200,000 vehicles, said Sen. Debbie Stabenow, D-Mich.
"I think the general public right now is looking for a bargain in any way to spend their money," said Kitty Van Bortel, who owns Ford and Subaru dealerships in Victor, N.Y., "and this was perceived as an incredible bargain and people took advantage of it."
The backlog had been building for weeks. Auto dealers could begin offering the rebate at the beginning of the month, and many began doing so over the July 4 weekend. But it was not until a week ago that dealers could begin filing for reimbursement, leaving them on the hook for as much as $4,500 per car until they get the federal money.
That's when they ran into difficulties with a federal Web site ill equipped to handle the volume of claims and the multiple documents each submission requires. Some dealers said the process took upward of an hour for each transaction, caused repeated rejections and consumed many hours submitting and resubmitting data.
At Walser Toyota in Bloomington, customers began lining up on Monday before doors opened at 7:30 a.m.. Swenson said. By that afternoon, his dealership had done 150 trade-ins under the program. His salesmen worked overnight to scan and submit forms.
But of the 150, he said, only 30 received responses and all of those were rejections.
Dennis and Marcia Strom hurried into that dealership Friday, fearing the rebates might not last, and filled out paperwork for a new car.
"I might have waited until the truck died," Dennis Strom said of his 14-year-old Dodge Dakota. "It's a good vehicle that suits our needs. But it's not worth $3,500."
