Hugely popular and incredibly short - both accurate descriptors for the Car Allowance Rebate System (CARS), or 'cash for clunkers', as it was known. The U.S. Department of Transportation today announced that the program, which helped fund the purchase of about 700,000 new cars and the elimination of an equal number of clunkers, will shut down as of 8 p.m. Monday night.

Just a couple of weeks after President Obama signed in an additional $2 billion in emergency funding for the ‘cash for clunkers’ bill, reports began emerging that the program was already be out of cash, and today the reports were confirmed: almost all of the $3 billion allotted to the program has been used up. “This program has been a lifeline to the automobile industry, jump starting a major sector of the economy and putting people back to work,” said Ray LaHood, U.S. Transportation Secretary. “At the same time, we’ve been able to take old, polluting cars off the road and help consumers purchase fuel efficient vehicles.”

The National Association of Auto Dealers (NADA) asked the government to suspend the program as of midnight last night, and warned dealers they are at risk of not getting reimbursed if they make any further clunker deals.

The alerts were based on a NADA survey that shows dealers have already completed enough clunker deals to exhaust the allocated $3 billion in funds. Dealers have only been reimbursed for about half of those funds, leading some to stop making clunker deals on their own. Consumers are also cautioned by the CARS program itself not to sign contingency deals that would require the buyer to pay back any incentive money allotted through the dealership in the event that the program falls short on its funding.

The program was originally conceived for $4 billion in funding, so it is still possible that Congress will allocate a last $1 billion, though it would require quick action ahead of the weekend.

The cash for clunkers program only benefits owners of old cars that cannot achieve above 18 mpg in their combined cycles. If these owners swap their cars for a new car that’s at least 4 mpg more efficient, they will be eligible to receive a $3,500 voucher from the government. The full $4,500 is only available to those who improve their gas mileage figures by 10 mpg or more.

Trucks use a different system, where the new truck that is being purchased must achieve at least 18 mpg and also be 2 mpg more efficient than their current vehicle. This would garner owners the $3,500 voucher, while those improving their mileage by 5 mpg would get the full $4,500.

Combined with new tax breaks from the government that eliminate local and state taxes, the government is significantly absorbing the costs of new cars to keep the auto industry viable through the recession.

[GreenCarReports, Freep]