Dealerships waiting for payback
Federal reimbursements flow barely at a trickle
By Warren Wise
Keith Roberts' car lot is full of clunkers.
That's because he's waiting for the federal government to reimburse him for the 50 gas-guzzling vehicles traded in under its surprisingly popular Cash for Clunkers program.
The Post and Courier
Hoover Dodge Chrysler Jeep in Summerville has 50 clunkers waiting to ship to the scrap heap.
Roberts, general manager at Hoover Dodge Chrysler Jeep in Summerville, has lots of new cars too. But he's holding onto those old trade-ins until the feds ante up the money they promised under the program, officially the Car Allowance Rebate System program.
The program offers up to $4,500 to shoppers who trade in gas guzzlers for more fuel-efficient vehicles. Dealers pay the rebates out of pocket then must wait to be reimbursed by the government, but administrative snags have created a bottleneck in unpaid claims.
Of the 50 clunker deals Roberts has made since the program started July 27, he hasn't received a single reimbursement.
"We are on the hook for the money until the government pays up," he said. "We are holding onto the clunkers until then."
An informal survey from the South Carolina Automobile Dealers Association of 104 of the 290 dealers in the state earlier this week showed 2,331 clunker deals so far under the $3 billion federal incentive program to drive gas hogs off the road and stimulate car sales.
The federal government has sent back money to dealers for only 36 of those deals among the dealers who responded to the survey, said Pat Watson, the association's executive vice president. That's fewer than 2 percent of all clunker deals.
"A number of dealers have started to worry about not only when they are going to get paid but if they are going to get paid," Watson said Wednesday. "We would like to have a drop dead date. If a deal is done before this date, it's going to be paid."
Top of the heap
The most popular trade-ins under Cash for Clunkers are the Ford Explorer, the Ford F-150 pickup and the Jeep Grand Cherokee. The 10 topselling vehicles, in descending order, have been:
• Toyota Corolla
• Honda Civic
• Ford Focus
• Toyota Camry
• Toyota Prius
• Hyundai Elantra
• Ford Escape
• Honda Fit
• Nissan Versa
• Honda CR-V
— Source: U.S. Dept. of Transportation
He applauds the government for creating a "terrifically successful" sales stimulus program for the industry but said officials need to understand that businesses need their money to operate.
"If I have $100,000 on the street that is my money and I'm paying interest on it and they are not reimbursing me, that's not a good way to run a business," Watson said.
Roberts said he's talked with friends in the car business across the country and none of them have been reimbursed either.
"There are some dealers out there that are stopping the offer," he said.
About half of the 425 members of the Greater New York Automobile Dealers Association have stopped the rebate program because they can no longer afford it, said Mark Schienberg, president.
With less than two percent of dealers in his state being reimbursed as well, many have been left short on cash, Schienberg added.
Dealers claim the problem lies with federal officials overwhelmed by the program's smashing success. The White House announced Monday that by week's end it would triple its work force within the Transportation Department to try to process the clunker rebates at a quicker rate.
On Wednesday, U.S. Transportation Secretary Ray LaHood assured car dealers that they will be reimbursed.
"I know dealers are frustrated. They're going to get their money," LaHood said.
He added the Obama administration soon would announce how much longer the $3 billion car incentive program will last.
Through early Wednesday, auto dealers have made deals worth $1.81 billion and are on pace to exhaust the program's funds in early September. The program has generated more than 435,000 vehicle sales.
Hendrick Honda on Savannah Highway has been among the luckier dealers to be reimbursed.
More information
Cash for Clunkers, Car Allowance Rebate System web site
Of the 100 clunker deals it has made, the West Ashley dealer has been reimbursed for 10 of them, said Tony Beasenburg, new car sales manager.
Still, Beasenburg said Honda officials told the dealer to proceed with sales but to do so cautiously.
"We may be cutting the program off before the government cuts it off because they are not flowing with the money," he said of the federal incentive that's set to run through Nov. 1. "It's kind of put brakes on itself because the government is not funding it and flowing the money like they said."
Beasenburg said Hendrick Honda normally carries a 90-day supply of inventory on its lot and is down to a nine-day supply. He's afraid some dealers might run into trouble next month when the 2009 models are gone and the 2010 models haven't arrived.
"September will be an ugly month on the new car side because we won't have the new car inventory," he said. "We will be hit with a gap."
The Associated Press contributed to this report. Reach Warren Wise at 937-5524 or wwise@postandcourier.com.
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lou9 (anonymous) says...
This is a preview of how government run health care will be. Doctors and hospitals will not get paid either.
August 20, 2009 at 7:17 a.m. ( permalink | suggest removal )
scottmcx (anonymous) says...
The Gov't claimed this was a "great success". Yeah, for them. They do nothing, as usual, and private business suffers.
What a great example of program management.
August 20, 2009 at 7:33 a.m. ( permalink | suggest removal )
happy2behere (anonymous) says...
I wonder how many of these people buying these cars can actually afford to make their car payments. It might be the mortgage problems all over again with car payments. We will wait and see.
August 20, 2009 at 7:56 a.m. ( permalink | suggest removal )
suec (anonymous) says...
if they can't get this right how are they going to deal with something as complex as healthcare?
August 20, 2009 at 8:43 a.m. ( permalink | suggest removal )
SCGirl0901 (anonymous) says...
What the people that have traded in their clunkers may not realize is this.. The reason their trade-ins are still on the lot is if the government doesn't come through with the money - they will be called and asked to return the new vehicle. It's already happened to people that have had an issue with the registration of the clunker they traded. Some have had a lapse for one reason or another and it disqualifies them.
The dealers are holding onto the cars until the money is in their hands - and who can blame them?
August 20, 2009 at 8:43 a.m. ( permalink | suggest removal )
Larz13 (anonymous) says...
Too bad we cannot trade in Nobama and Biden for $3500.
August 20, 2009 at 9:43 a.m. ( permalink | suggest removal )
drp7773 (anonymous) says...
Lets not forget some (not all) these dealers took the manufacturing rebate or dealer rebate off and used the clunker money instead. So in many cases the public still got screwed.
August 20, 2009 at 10:09 a.m. ( permalink | suggest removal )
nopartisan_noproblem (anonymous) says...
Drp, I don't think you're getting screwed when you agree to buy something for a set price. If they agree to sell you a loaf of bread for $100 and you buy it. You didn't get screwed, you're an idiot.
August 20, 2009 at 10:14 a.m. ( permalink | suggest removal )
bigdaveyb (anonymous) says...
The 10 topselling vehicles, in descending order, have been:
• Toyota Corolla
• Honda Civic
• Ford Focus
• Toyota Camry
• Toyota Prius
• Hyundai Elantra
• Ford Escape
• Honda Fit
• Nissan Versa
• Honda CR-V
— Source: U.S. Dept. of Transportation
So how is this helping GM, Dodge, and Ford?
August 20, 2009 at 11:06 a.m. ( permalink | suggest removal )
kontact (anonymous) says...
Its a good thing Im in he car business and dont listen to yall rant about how bad the govt is-I can see for myself and come to my own conclusion as to what type of job they are doing--let me tell yall since people are so quick to put down the gov't---cash for clunkers has been am extraordinary success for dealers--dealer sales has increased about 35-45% across the board, which means so has their profit margin!-so what if the program has been too successful? I wish that they would implement other programs with the success of this program-- Sales are thru the roof-dont believe me then go toany new car dealership (Chrysler, Ford, GM too) and try to get picky on the type of car u want-thereis no inventory left because of this program-all manufactures are increasing production in the factories--who does this benefit? ALL OF US!!!Take the politically biased complaints somewhere else cause I am just as critical of the govt as the next man but this is helping to feed my family so stop!!
August 20, 2009 at 11:19 a.m. ( permalink | suggest removal )
mattcofc (anonymous) says...
The poor used car salesman and the engine salvage business are boned thanks to this. Good luck trying to find a refurb engine as this will eventually make them scarce or more expensive. As for domestic automakers, you reap what you sow. Look at the top 10 cars that are being bought, people want value, reliability, and a brand name they trust not some line from Detroit about them reinventing the American car.
August 20, 2009 at 11:39 a.m. ( permalink | suggest removal )
ColdBud (anonymous) says...
Dear Mr. Car Dealer,
Please excuse me if I, Mr. Middle Class American Tax Payer, am a little slow in paying you what this Congress and this Administration have promised I would pay you. I have always paid all of my debts on time, but things are starting to get a little tight around my house. You see, I've been paying the mortgages of people that made bad financial decisions and can't pay their own mortgage. I've also been busy buying auto manufacturing companies so that I can pay a union man or woman an outrageous hourly wage to put bolt A in to hole B. Of course, I also help provide food and housing and drugs (mostly drugs I suspect) for people that keeping having child after child when it’s obvious they can’t afford the children they already have. I was going to send you some money for this CARS program, but I'm trying to budget for the future expenses this Congress and this Administration feel I should pay, mainly, paying for health care coverage for those that did not put themselves in a position to pay for their own coverage.
While I'm not sure why I am being asked to help buy cars for those that did not put themselves in a position to buy their car on their own, I will again oblige. I'm that way. I earn my way, AND the way for many others that refuse to get off of their butts and earn their own way.
I’m struggling, Mr. Car Dealer. Everything this Administration and this Congress has done, and plans on doing, takes hard earned money from my pocket and gives it to someone that doesn’t understand the meaning of providing for themselves. Yes, I know, only the “rich” are going to see tax increases. That doesn’t fool us though, does it Mr. Car Dealer. Our Government is run off of our taxes. One big pot of tax money. When that tax money is given away to free loading dirt bags, we all contribute and we all suffer.
I will continue to earn my way though. I will continue to pay taxes and pay the debts this Congress and this administration feel I should pay. My father raised me to be a proud, responsible adult. I grew up under the assumption that all kids were raised that way. I was wrong. My bad.
I will get you your money soon.
Signed,
Mr. Middle Class American Tax Payer
August 20, 2009 at 11:40 a.m. ( permalink | suggest removal )
outrage (anonymous) says...
Kontact --"so what if the program has been too successful?"
----------------------------
It is a false positive. When the tax-payer funded program runs out of money your sales figures will drop again.
You think it is successful because it has helped you momentarily. You do not help the few at the expense of the many.
"The problem with Socialism is eventually you run out of other people's money".
August 20, 2009 at 1:24 p.m. ( permalink | suggest removal )
GG (anonymous) says...
I am still steaming that my tax dollars went into this program to help people get a new car. I had to pay the full price b/c I don't drive "clunkers" for economic and safety reasons. And I am penalized twice.
This is just a sign of things to come with this president's socialist programs. They give it away and tax us to the hilt doing it.
If we adopt a new health care plan, I hope it focuses on assisting only those who can't help themselves - the young and the very old, rich or poor. All the other able-bodied should work on getting good educations and finding meaningful employment. (If they can with this president and Congress.)
August 20, 2009 at 1:46 p.m. ( permalink | suggest removal )
Name_Withheld (anonymous) says...
Whiners. Just a few weeks ago they were whining because they had no deals. Just think what it would have cost them to sell no cars.
August 20, 2009 at 3:43 p.m. ( permalink | suggest removal )
Larz13 (anonymous) says...
Wait and see what these dealers do when the incentive is over. Watch out for falling numbers!
August 20, 2009 at 4:22 p.m. ( permalink | suggest removal )
ln1959 (anonymous) says...
GG unless you smoke, you tax have not gone up. Well, unless SC have raised your tax.
August 20, 2009 at 4:31 p.m. ( permalink | suggest removal )
lowcountrydawg (anonymous) says...
Oh...and just wait for the good deal we'll get once the 'gubment' runs our healthcare!!
August 20, 2009 at 5:59 p.m. ( permalink | suggest removal )
SuperRog (anonymous) says...
Um..Mr. President. My dad is sick and I need him to be taken care of. Can you help?
No, sorry SuperRog, But the program ran out of money. But that just means that it was successful.
August 20, 2009 at 8:52 p.m. ( permalink | suggest removal )
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