General Motors Co will provide cash advances to dealers to cover Cash for Clunkers rebates while the incentives are being processed by the U.S. government, the company said on Thursday.
GM said the action would provide dealers with the liquidity to run their businesses while they wait for their government checks.
The move comes in the face of weeks-long delays in reimbursements and address growing concerns among dealers that the program's $3 billion funding may run out before they receive the rebates owed to them.
A group representing the country's some 20,000 new car dealers warned on Wednesday that dealers who accept additional deals under the rebates program face a growing risk that they might not be paid back.
Given the popularity of the program and the rapid pace at which 'clunker' deals are being done, it is difficult, if not impossible, to accurately project the burn rate of available funds, the National Automobile Dealers Association said in a statement.
GM said sales in the past two months have exceeded its internal forecast by over 60,000 vehicles, largely driven by the federal incentives.
The program offers payments of up to $4,500 to people who trade in older, less fuel-efficient vehicles for new, more efficient ones.
The automaker intends to provide advances for qualifying new vehicle sales already transacted under the rebates program and will provide advances going forward as long as the program is in effect, it said.
(Reporting by Soyoung Kim, editing by Gerald E. McCormick)