Dealers warned off Cash for Clunkers

Auto dealers' association advises members to play it safe and avoid Cash for Clunkers deals this weekend.

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NEW YORK (CNNMoney.com/Reuters) -- Despite the Obama administration's promises that any Clunker deals written this weekend would be honored, the National Automobile Dealers Association is advising its members to play it safe and not close any more deals until the program's fate is clearer.

"Regarding auto sales this weekend, one possible alternative is for dealers to take deposits in lieu of consummated sales with an eye toward legislative success next week," NADA spokesman Charles Cyrill wrote in an e-mail.

The House of Representatives allocated $2 billion more on Friday to continue the program after it apparently burned through its original $1 billion budget in the week since its official July 24 start date. The measure faces opposition in the Senate, however.

"We could have a legislative conclusion very quickly with the promise of more money for the program," Cyrill said later by telephone. Until that's settled, he said, the dealers' organization is recommending that dealers proceed with caution.

Sunday, the Obama administration expressed optimism that the Senate will extend the program, but warned it would be suspended at midweek without new funding.

"This has been a wildly popular program and given new life to auto dealers," Transportation Secretary Ray LaHood said on an interview on C-SPAN. "This has worked very, very well."

LaHood said the administration anticipates members to follow the House, althought questions emerged Sunday of a possible Republican attempt to block the extension outright.

Under the plan as enacted, vehicles purchased after July 1 will be eligible for refund vouchers worth $3,500 to $4,500 on traded-in gas guzzlers. The trade-in vehicle has to get a combined city and highway fuel economy rating of 18 miles per gallon or less.

Since the rules of the program require dealers to render traded-in vehicles permanently inoperable before applying for their rebates, dealers whose applications are not honored could be left with no money and no vehicle to sell.

The program aims to help the struggling auto industry by taking inefficient cars off the road and spurring new salesTo top of page

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-- Reuters contributed to this story.