Not only will General Motors give its dealers the cash that is already owed, but will also cover any future sales that are made under the Car Allowance Rebate System.

The program, which is expected to come to an end in early September has been far more popular that anyone predicted, and General Motors reports that its sales over the past two months were above forecasts by 60,000 vehicles.

The Transportation Department, which is responsible for the management of the program simply was not ready to handle all the transactions that were made under the program. They have tripled their manpower, but the backlog is still tremendous, and only a very small fraction of the payments have been made back to the dealers.

According to the Greater New York Automobile Dealers Association, only 2% of its dealers requests have been paid back so far.

General Motors is not the only auto maker that has seen sharp increases in sales during the program. The Ford Motor Company (NYSE: F) and Honda Motor (NYSE: HMC) have also seen big increases in consumer demand and have boosted production to keep inventory on their lots. General Motors announced on Monday that it too would be increasing production to keep up with demand.

So far Ford and Chrysler have yet to comment on whether or not they will follow General Motor's example.