As the Cash For Clunkers program has soared in popularity, some cracks have appeared.
Charities nationwide have publicly worried how it may affect their bottom line. Meanwhile, the National Highway Traffic Safety Administration, which administers the program, has been overwhelmed by applications and slow to grant rebates.
The Mission Solano homeless shelter is one of the nonprofit groups worrying about the impacts it will feel from the popular program, which they say is sapping one of their prime sources of income -- used car donations.
“We are seeing our pipeline (of used cars) dry up,” said Ron Marlette, executive director of Mission Solano. “This will affect us for months. I know the program is going to be over real quick, but the effect of the program . . . will be felt for months.”
The federal Cash for Clunkers program offers thousands of dollars in rebates to people who trade in their used car for a new, cleaner vehicle. The program then requires the used cars to be destroyed.
Since the program began in late July, Marlette said Mission Solano has seen about a 40 percent drop in activity at their Drive Away Hunger used car lot on North Texas Street, Marlette said.
He has called for changes that would allow dealers to turn the clunkers over to charity, where they could be resold to needy drivers.
But while the impact might be significant for Mission Solano, it may be negligible for smaller charities, said Stephanie Wolf, director of the Solano Community Foundation. She said many smaller nonprofit groups don’t deal with used car donations and simply want Cash For Clunkers to improve the overall economy.
“What’s happening with nonprofits really mirrors the larger situation,” she said. On the whole, interest in the Cash For Clunkers program may be waning. The auto industry Web site Edmunds.com released a report Tuesday that suggested car-buying, while still at high levels, had receded from an initial frenzy. “Barring any intervention such as a major incentive program or a significant uptick in the economy, sales will be back to pre-clunker levels by next week,” the company predicted.
In the meantime, administrators have been playing catch-up. Because refunds have been slow to go out, many dealers have been holding on to the cars and refraining from having them recycled. It was recently reported that the highway administration hired 100 employees to process the applications and get the money flowing to dealers.