U.S. to suspend ‘guzzlers’ program, sources say

Automotive News | July 30, 2009 – 8:52 pm EST

 

U.S. to suspend ‘guzzlers’ program, sources say
 

WASHINGTON (Reuters) –The Obama administration will suspend a $1 billion program intended to spur U.S. auto sales after it surprisingly approached its funding limit after only a few days, government and industry sources said.

The so-called "cash for guzzlers" program authorized up to $4,500 to car buyers who traded in their gas guzzlers for more fuel efficient vehicles.

The program was expected to run through October, but the sources said the administration would suspend it within the next day.

Transportation Department officials had no immediate comment on the program that the agency administers.

The government estimated 250,000 auto sales if the full rebate was granted. It is unclear how many vehicles have been sold under the program, which was formally launched on July 24.

Congress approved the initiative mainly to help the industry pull out of a severe industry sales slump that has worsened amid the U.S. economic recession.

The weak sales environment contributed to bankruptcies at General Motors Co. and Chrysler Group this spring.

The trade-in program was also open to consumers who wished to purchase imported vehicles, mainly passenger cars from Asian and European automakers. Domestic manufacturers tend to sell more SUVs and pickup trucks.

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