My Dad is in a NH and is ready to go on Medicaid, was told that he could buy a new car for his spend down money. Is that true?

Yes, it is true. But what would be the purpose of that? Surely there are other things he would really benefit from. A personal mobility scooter? A new wardrobe? Cable and magazine subscriptions paid out for a long period? A nice bedspread? This is kind of his last chance to splurge. He should have a prepaid funeral plan.

He can't buy a car and give it away. The spending has to be for himself.

If there is nothing he really needs, he can simply be private pay a few months longer until his money is gone.