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Hyundai advances cash to car dealers for 'clunkers' program

The government hasn't yet finalized the rules of 'cash for clunkers,' which will give people credit toward a new car in exchange for an old gas guzzler.

July 03, 2009|Bloomberg News

Hyundai Motor Co., South Korea's largest carmaker, is advancing money to U.S. dealers so they can immediately take advantage of a "cash for clunkers" program.

The payments cover new-vehicle credits for consumers until the federal government completes rules for the program and begins paying dealers, Hyundai spokesman Chris Hosford said Thursday. Hyundai is the first manufacturer to extend such advances, he said.

Under the program, people can get credits of up to $4,500 to buy a new vehicle in return for handing in an older one with lower gas mileage to be scrapped. The government has a July 24 deadline to complete rules describing how it will reimburse dealers for the credits.

Hyundai's action is among automakers' efforts to boost car sales battered by a recession. U.S. vehicle sales in June fell 28% to about 860,000. It was the 20th straight monthly decline, Autodata Corp. said.

Sales as of July 1 may be eligible for credits under the clunkers program, the National Highway Traffic Safety Administration said last week. Still, dealers that make sales before the rules are finalized "bear the risks" of later showing that the sales qualify, the agency said on the program's website.

The National Automobile Dealers Assn. recommends that dealers wait for the rules to come out before acting.

Dealers could be fined $15,000 per sale for violating the rules, NHTSA has said.

Hosford and Reilly said they were confident that retailers wouldn't end up paying a price for the early sales because the criteria for qualifying vehicles are spelled out in the law enacted June 24.

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