The program covers vehicles sold from July 1, but the government has not crafted regulations for it. The U.S. Transportation Department is to issue those rules by July 24.
The program offers either $3,500 or $4,500 to a consumer who trades in a car or truck for a more fuel-efficient one. The drivetrain of the trade-in will have to be crushed or shredded by a disposal entity such as a junkyard, but other parts can be salvaged and sold.
The $1 billion program is expected to cover 250,000 trade-ins through Nov. 1, although Congress may appropriate more money and extend the program.
The National Automobile Dealers Association is "strongly advising" dealers to wait until the rules are spelled out before selling vehicles under the program, says spokesman Bailey Wood.
Dealers who sell vehicles without knowing the rules risk not getting paid the incentive if they don't comply with the law, Wood says. He also points out there is a $15,000 fine if dealers violate the law.
Wood says NADA encourages dealers to talk with customers about the program and set up deals, "but don't ink it."
Shayne Goff says the federal government's cash-for-guzzlers incentive program is an answer to sluggish auto sales but raises a lot of questions, too.
For example, Goff, the general manager of Wendle Motors in Spokane, Wash., says he doesn't understand what happens to money generated from trade-ins sold to scrap yards.
"I've read that the dealer can keep up to $50, but I don't know how to disclose it, where it goes, who it goes to," says Goff, whose dealership group has Ford, Nissan, Suzuki and Infiniti franchises. "We're seeing the traffic and putting deals together, but we're not delivering vehicles."