The federal government, which will put the brakes on Cash for
Clunkers on Monday, says it feels the pain of auto dealers waiting
to be reimbursed for car sales under the rebate program.
By Mark Glover, The Sacramento Bee
The federal government, which will put the brakes on Cash for Clunkers on Monday, says it feels the pain of auto dealers waiting to be reimbursed for car sales under the rebate program.
But that’s little consolation when you’re owed a million dollars.
Katina Rapton, general manager of Mel Rapton Honda in Sacramento, said Thursday that her dealership along the Capital City Freeway has processed more than 120 vehicle sales since the Car Allowance Rebate System, or CARS, kicked off July 27.
To date, the store has not received a single dollar of federal reimbursement.
“With everything taken together, we’re waiting for more than $1 million,” she said. “Actually, we’re fortunate. We’re very well-capitalized. This could break other dealers. I’ve only heard of a handful of dealers who are getting paid.”
One of those is John Driebe, who operates Nissan, Infiniti and Mazda stores in the Elk Grove Automall. But his batting average is only about 10 percent.
“We’ve had about 160 transactions so far, and we’ve been paid on 16,” he said. “Our older ones are being paid first, so I guess that shows there is some chronological order to the process.”
Beleaguered U.S. dealers who have processed tens of thousands of clunker rebates of $3,500 or $4,500 for consumers buying new, more fuel-efficient cars were cheered by Thursday’s announcement by the U.S. Transportation Department that the government will wind down Cash for Clunkers on Monday at 5 p.m. PDT Transportation Secretary Ray LaHood, who on Wednesday said, “I know dealers are frustrated; they’re going to get their money,” said Thursday that the government will now work “toward an orderly wind down of this very popular program.”
Presumably, that means federal officials will have more time next week to process the ocean of CARS reimbursements. DOT said it is tripling its work force to deal with CARS paperwork to 1,100.
DOT said CARS incentives have so far generated more than 457,000 vehicle sales nationwide. The Obama administration said the government has reviewed nearly 40 percent of CARS transactions and paid out $145 million to dealers to date, the Associated Press reported.
The administration said there are no plans to seek additional funding, and applications for rebates will not be accepted after the Monday deadline, AP said. Dealers will be able to resubmit rejected applications after the deadline.
DOT said some applications have been rejected due to improperly filled out forms and cases where consumers had insufficient proof of clunker ownership under CARS rules.
Rapton noted that the initial consumer rush to buy new vehicles under the Cash for Clunkers program also swamped banks and other lenders processing new-car paperwork.
“They’re so busy that they’re paying slow, too,” she said.
Dealer frustration with government reimbursement delays boiled over this week.
The Greater New York Automobile Dealers Association, which represents dealerships in the New York City area, said that about half its 425 members left the CARS program because they could no longer afford to offer more rebates.
The McLean, Va.-based National Automobile Dealers Association trade group met with officials, fearing that U.S. dealers might not be reimbursed by the government if the program’s budgeted $3 billion has been depleted. Federal officials indicated Thursday that dealers meeting the deadline will be paid.
“Given that the funding could run out at any time, the government is erring on the side of caution so neither consumers nor dealers are left holding the bag,” said Jeremy Anwyl, CEO of Edmunds.com, the Santa Monica-based automotive site. “We expect there will be a flurry of activity over the weekend as the program comes to a close.”
“As the program is wound down, it is vital that the government focuses its energies on speeding voucher payments to dealers, many of whom need those funds to pay their own employees,” said Cody Lusk, president of the Alexandria, Va.-based American International Automobile Dealers Association.
Local dealer Driebe said processing Cash for Clunkers transactions was “an arduous process – but we did it enough times that we’re doing it well.”
Driebe said he plans to wrap up Cash for Clunkers transactions at his Elk Grove dealerships on Sunday, “which will give us enough time on Monday to process the paperwork. We have a limited amount of time to do that. Hopefully, people will be patient over the weekend.”
Despite CARS glitches, Driebe said, “it’s been great to be selling cars, because it’s still a very difficult environment right now. It’s also good that some of the really high-mileage SUVs are off the road.”
With a chuckle, Driebe said the CARS program ultimately was a plus: “I think it’s a wonderful program as long as I end up getting paid. I have faith in the fact that the government is not going to leave us out.”
