Popularity, Web snafus nearly broke 'clunkers'

NEW YORK - This was one government stimulus plan that yielded quick results. Maybe too quick.

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."

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.

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.

President Barack Obama said the program has "succeeded well beyond our expectations" and praised the House for moving quickly to establish new financing.

"This is a test drive," Rep. Steve Israel, D-N.Y., said of the program, "and people bought it big time."