[Update - August 7th 2009] - An extension to the the much debated and hugely popular cash for clunkers - CARS - program gained Senate approval today, which clears the way for a vote later this week. President Obama has indicated that he will sign-off on the $2 billion extension, giving eager car buyers until Labor Day to cash in on rebates up to $4,500 for trading in their gas-guzzlers for new, higher-mileage models. Senate Majority Leader Harry Reid declared he had the votes to pass a $2 billion “cash for clunkers” measure already approved by the House. It would replenish the all-but-exhausted $1 billion program and provide rebates for up to a half-million more Americans in the next month. Despite reservations, Reid’s GOP counterpart, Mitch McConnell of Kentucky, predicted his party would not block a vote and “the matter will be completed.

The required approvals mean that there would be no interruption in the CARS program that has sent buyers streaming into formerly deserted auto showrooms and providing a much need boost to local and foreign automakers. There have been some rumors of dealers recalling cars sold under the program, but these are just rumors with 85% of dealers particpating in the CARS program.

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The U.S. government’s $1 billion “cash for clunkers” - CARS program looks to have run out of money after just one month as demand for the program has far exceeded expectations. However, in an emergency session the House of Representatives approved a funding measure to allocate another $2 billion (from the from the $787 billion stimulus plan) to fund the program. It will now go to the Senate for approval next week.

The CARS program provides as much as $4,500 toward the purchase of a new car when an older, less fuel-efficient, vehicle is turned in. Officials said that all existing vouchers issued until today (7/31) will be honored, but conceded that the additional funding is needed to keep the program going.

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Lawmakers had expected the program to generate about 250,000 vehicle sales and to have enough money to last until about Nov. 1.

“Any doubt that the CARS program would jump-start auto sales is completely erased,” said Greg Martin, a General Motors Co. spokesman to Bloomberg. “More than 200,000 cleaner, more fuel-efficient cars are on the road and a vital industry gets a needed boost. We hope there’s a will and way to keep the CARS program going a little bit longer.”

“We had a lot of good feedback from dealers as far as how much traffic they had as a result of this program,” said Greg Thome, a spokesman for Toyota Motor Corp. “Everybody is surprised that the popularity was that immediate.”

Charles Cyrill, a spokesman for the National Automobile Dealers Association, said, “If the program is indeed suspended, NADA will continue to work with the Department of Transportation to emphasize the importance that every dealer is reimbursed for a valid deal.”

The Transportation Department had said earlier this week that the money wasn’t running out. “When we get close, we will start alerting dealers so they don’t get caught with a deal in the pipeline,” said Rae Tyson, a department spokesman, in an interview July 28. “We’re not going to leave them hanging. We’re not going to run out of money in a couple days.” [Clearly not true given the recent house actions for emergency funding!]

The administration’s reports on clunkers applications from dealers didn’t indicate that the funds were near exhaustion. The National Highway Traffic Safety Administration, which is running the program, said yesterday that 22,782 vehicles worth $95.9 million had been sold. However, this number looks to be hugely understated according to various officials. “This was a very successful program, maybe even too successful,” Senator Charles Schumer, a New York Democrat, said yesterday in a statement. “The program should continue, but perhaps with a tune-up so that we get the most stimulus, conservation and efficiency for the buck.”

See this Article for all the details and qualifications on the Cash for Clunkers Program, plus other government funded auto incentives. I will update this article once the additional funding is approved and encourage you to subscribe (free) via Email or RSS to get the latest news.

Related:

~ New Car Stimulus Deduction
~ Key Dates for Stimulus Payments
~ Car Repairs & 5 Tips to Avoid Getting Ripped Off
~ Tips on saving money when buying a new car
~ US Automakers Bailout - A Bridge to Bankruptcy or a Road to Salvation