The Korean-built Hyundai Elantra was the most popular model purchased, at 41% of sales.

Hyundai has stolen a march on competitors by becoming the first automaker to claim that it is honoring the U.S. government’s “Car Allowance Rebate System” better known as the cash for clunkers program.

Cash for clunkers has accounted for 7% of Hyundai sales in its first week, which theoretically started on July 1 even though final guidelines have not been issued, according to spokesman Chris Hosford. The program, which cleared Congress only last month, is designed to stimulate new car sales, which are now caught in a deep slump since last autumn.

“The early response we’re seeing demonstrates the CARS program is working, with inefficient gas guzzlers being traded-in for fuel-efficient Hyundai models,” said John Krafcik, president and CEO, Hyundai Motor America.

No Taxpayer Cash Involved!

“We expect overall sales from this program to grow as consumer awareness increases — it should surpass 10% of our retail sales this month,” Krafcik. That means U.S. taxpayers will subsidize more than 3,000 sales of Korean automobiles.

Hyundai’s rollout enables buyers to receive the full rebate allocated under the CARS program when an eligible trade-in is exchanged for a qualifying Hyundai model at a participating dealership.

Thirty-two percent of the trade-in models reported by dealerships were Ford vehicles, followed by Dodge at 23%. Lexus, Jaguar, and Mercedes-Benz are among the other brands delivered as “clunker” trades, demonstrating both the broad appeal of the government program, and the changing nature of Hyundai’s product line and buyer demographics.

The fuel-efficient Hyundai Elantra was the most popular model purchased under the CARS program, making up 41% of sales. Elantra recently earned top honors in the 2009 J.D. Power and Associates Initial Quality Study for the highest initial quality in the compact car segment, and is rated as a “Top Pick” by Consumer Reports.

With manufacturer incentives and a full CARS rebate for a qualifying “clunker,” consumers can purchase a new Elantra for as little as $8,620, Hosford said.

The Sonata, at 29%, and the Accent, at 16%, ranked second and third, respectively, in CARS transactions in the opening week.

The new federal program doesn’t get under way officially until the end of July when guidelines are finalized.

Hyundai expedited its introduction by become the first automaker to extend the government incentive to consumers by offering dealers short-term cash advances as the government organizes the rollout of the program industry-wide. The decision has accelerated the implementation by several weeks at  Hyundai but potentially leaves dealers exposed to  hefty fines if they violate the final guidelines still to be issued.

Other automakers also are planning their own version of incentives, advertising and Internet sites tied to cash for clunkers program.

Under the CARS program, consumers qualify for a $4,500 rebate on the purchase or lease of new vehicles that achieve 10 miles per gallon more than a trade-in car or five miles per gallon or more than a trade-in light truck. New vehicles that achieve between 4 to 9 mpg more than a trade-in car, or 2 to 4 mpg more than a trade-in light truck qualify for a $3,500 incentive. See www.cars.gov for complete details.