N.Y. auto dealers pull out of clunkers program due to Govt. ineptness.

[Soul Crusher]

NY dealers pull out of clunkers program
Aug 19 02:00 PM US/Eastern
By DAN STRUMPF
AP Auto Writer

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NEW YORK (AP) - Hundreds of auto dealers in the New York area have withdrawn from the government's Cash for Clunkers program, citing delays in getting reimbursed by the government, a dealership group said Wednesday.

The Greater New York Automobile Dealers Association, which represents dealerships in the New York metro area, said about half its 425 members have left the program because they cannot afford to offer more rebates. They're also worried about getting repaid.

"(The government) needs to move the system forward and they need to start paying these dealers," said Mark Schienberg, the group's president. "This is a cash-dependent business."

The program offers up to $4,500 to shoppers who trade in vehicles getting 18 mpg or less for a more fuel-efficient car or truck. Dealers pay the rebates out of pocket, then must wait to be reimbursed by the government. But administrative snags and heavy paperwork have created a backlog of unpaid claims.

Schienberg said the group's dealers have been repaid for only about 2 percent of the clunkers deals they've made so far.

Many dealers have said they are worried they won't get repaid at all, while others have waited so long to get reimbursed they don't have the cash to fund any more rebates, Schienberg said.

"The program is a great program in the sense that it's creating a lot of floor traffic that a lot of dealers haven't seen in a long time," he said.

"But it's in the hands of this enormous bureaucracy and regulatory agency," he added. "If they don't get out of their own way, this program is going to be a huge failure."

The program is administered by the Department of Transportation. Transportation Secretary Ray LaHood said Wednesday that dealers will be repaid for the clunkers deals they have completed.

"I know dealers are frustrated. They're going to get their money," LaHood told reporters. He said the Obama administration would soon announce how much longer the $3 billion car incentive program will last.

Through early Wednesday, auto dealers have made clunkers deals worth $1.81 billion, resulting in 435,102 new car sales, according to the DOT.

________________________ ________________________ _____________

And you guys think they can manage health care??

[The True Adonis]

Was the Cash for Clunkers program a success? Yes


It didn’t take a fast-talking car salesman to convince Congress to release more money to the Cash for Clunkers program. Even some skeptics caved in the face of unexpected numbers of people trading in old beaters for new, better-mileage cars.

The legislation has been so wildly successful that it sold a quarter million cars — and burned through the first $1 billion from Congress — in just 10 days. Ford Motor Co. reported its first monthly sales increase in two years. Previously overstocked dealers suddenly face the need for new inventory, which will grease the rusty automobile supply chain and add work to the factory floor.

Congress’ assent to an additional $2 billion will further rev Michigan’s idling economy. No wonder the bill passed with solid majorities in both chambers and was backed by every member of Michigan’s congressional delegation, Republican and Democrat.

The effects in Michigan have been more than positive. The state led the way in Clunker rebates — totaling more than $34 million — during the first week. A federally driven auto sales renaissance is no substitute for a genuine economic recovery, of course. But it will help until the recovery arrives. And economic indicators hint the turnaround could be coming.

Cash for Clunkers is moving cars. For those of us in Michigan, that’s reason enough to refuel.

The Grand Rapids (Mich.) Press, Editorial

[The True Adonis]

You see 333366, the problem is that it is TOO SUCCESSFUL to meet demand.

Dealers are jumping the gun and need to pace themselves with the trade ins.  A lot of dealers are taking trade ins prematurely without first filing the necessary paperwork.

[The True Adonis]

Cash For Clunkers Success May Be A Problem
By Brian Sullivan




Cash for Clunkers is officially a success.    Consumers are streaming into showrooms and cars are selling.   But less than a month into the plan, that success is generating concerns among dealers which may stall the program less than a month into it.

The problem has to do with money, paperwork and time.

The government has allocated $1 billion for the Cars Allowance Rebate System (CARS), better known as Cash for Clunkers.   With approximately 20,000 dealers and brands (the same dealers can apply for each brand they sell) approved, and an average of $4,000 per vehicle credit, each dealer can sell 12-13 cars before the $1 billion total allocation runs out.   ([$1,000,000,000 / 20,000 brands/dealers = $50,000 per dealer] / $4,000 per car = 12.5 cars per dealer/brand).

Dealers provide the credit to the buyer upon sale of the car.   The discount comes off their balance sheet, and they then wait for the government to repay them and make up the difference.    One dealer I spoke with said it is currently about a 10 day wait between the sale and when the government rebate arrives.    However, as the program grows and the volume of paperwork increases, there is fear that delay may widen.   That gap may eventually drain the program of funds even as some car dealers wait for their sales to be processed, resulting in the government denying the rebate and forcing the dealer to eat the loss.   None of the dealers I spoke with said they could handle losing $3,500-$4,500 per car.

It is the success of the program that is resulting in the concern.

Three of the five dealers I spoke with as of 4pm ET on Wednesday have sold more than 12 cars under the program.  One dealer had sold seven cars but had only begun applying the program since Monday.   That sales pace would have them sell about 13 vehicles by the end of this month.    Naturally every dealer is going to sell as many as they can and file the paperwork as fast as they are able, potentially jamming up the system and leaving the government and dealers with a big hole in funds.

The result is that a number of car dealers are reporting that they are quietly pulling back on selling cars under the program for fear they may not be paid back by the government.    Others tell Fox Business they are not delivering cars to buying customers until the government check clears and that some buyers may have to wait weeks to pick up a car they have already purchased. Of course, even a few weeks is a small price to pay for $4,500 bucks off the price, but it does give consumers precious time to reconsider their purchase.

So for consumers interested in the plan the message is clear: don't wait to buy, or be willing to wait for your car.   The funds may run out well before the clunkers' program is scheduled in end in November.

As of late afternoon on Wednesday, the CARS calculator indicates about $850 million remaining in the program.    This calculator however has not been updated since early Tuesday morning, and it is unclear how many cars have been sold in the past 36 hours.   Remember, even in a slow economy, 250,000 cars is actually only about a week's worth of auto sales.

Dealers believe the government needs to provide guarantees they will be repaid, or be willing to extend the program's financial allocation.

And consumers, always remember to get your deal in writing, especially if you must wait to take delivery of your new car.

[The True Adonis]

Cash for Clunkers Gives GM a Boost
Carmaker Will Increase Production by 60,000 Vehicles, Rehire Workers
By CHARLES HERMAN
Aug. 18, 2009

General Motors announced today that it will build 60,000 more cars and trucks this year as supplies have dropped and sales have spiked more than expected, in part because of the "Cash for Clunkers" program.



The announcement will lead to additional shifts and overtime at several factories and the reinstatement of 1,350 workers at two plants.

GM said that sales in the month of July and August are between 60,000 and 70,000 units above what the company had predicted as recently as two months ago. In July, the automaker had approximately 300,000 units for sale compared to a peak level of 1.3 million vehicles available at one point in the past four years.

"We are running much hotter, as is some of our competition as well," said Mark LaNeve, GM's vice president of U.S. sales. "I would say a big chunk of that is obviously attributable to the success of the Cash for Clunkers program."



"Some of the lift that we are seeing from that program, we are anticipating in our sale forecast, obviously, that will fall off, and even with that given, we definitely need to have this production, if not more," he said.

As Cash for Clunkers enters its fourth week, Edmunds.com, a Web site for car buyers and sellers, reports the number of people taking advantage of the program appears to be on the decline.


"Now that there is plenty of money in the program and the most eager shoppers have already participated, the sense of urgency is gone, and the pace of intent decline is accelerating," said Edmunds.com CEO Jeremy Anwyl. "Inventories are getting lean and prices are climbing, giving consumers reasons to sit back."

Edmunds.com concluded that sales activity last week was down 15 percent from the peak in July.

Even with the additional 60,000 vehicles, however, GM's production will not match the level seen just a year ago.

According to IHS Global Insight, GM produced more than 1.7 million in the second half of last year. This year, with today's increase, the company will build just more than 1 million cars and trucks, a decline of nearly 39 percent.

To meet the increased demand for vehicles that is expected to last even as the clunkers program comes to an end, GM is adding shifts at a plant in Ontario, Canada, where the Chevy Equinox and GMC Terrain are built, as well as at the Lordstown, Ohio, plant where the Chevy Cobalt is manufactured.




For example, at the Ft. Wayne facility, shifts will increase from two 10-hour shifts four days a week to a five-day work week with significant overtime.

In addition, the Orion Assembly Plant, which was to be put in standby capacity starting next month, will now remain in operation until just before Thanksgiving of this year. The plant is expected to restart production in 2011 to build a future small car.

[The True Adonis]

Personally I would revamp it a bit.

I would take the cars that are turned in and allow them to be bought for under 500 dollars by anyone needing a car, with the money going to the Government, using the money for other "Green Projects" to offset the carbon had the car been simply crushed.

Also, I would have each dealer donate a certain a number of turned in cars that work or need minimal work to state by state organizations who provide donated cars to anyone who needs them.

That would be MY ammendment to the bill.

[Soul Crusher]

Like I said - it was a success for those getting the welfare check, but a disaster for those who actually have to pay for it. 

[The True Adonis]

Like I said - it was a success for those getting the welfare check, but a disaster for those who actually have to pay for it. 

Wrong on all accounts.  You simply get a credit from the dealer.  This program has generated way more revenue than the money set aside for it.  It has also allowed the re-hiring of workers and has increased production of the Big 3 greatly as well as increased their profits finally as a result.  This is truly a fiscal success as it is operating completely in the green. (forgive the pun).

This is fiscally sound and responsible.  It is IMPOSSIBLE to deny the results and facts and you know it my friend.

[BM OUT]

The results?The results are the dealerships are on the hook for thousands and thousands of dollars.This has been a HUGE failure.Once again,Obama purposely tries to destroy the guys that produce in this country to give money to failures.Thats the Obama way.

[Bindare_Dundat]

When the government doesn't reimburse businesses that's a good thing. Also, ignorance is knowledge, war is peace and freedom is slavery.

[Hugo Chavez]

It hasn't even been that long?  How fast did these guys want their checks?  Like right away I guess.

[Bindare_Dundat]

  How fast did these guys want their checks?  Like right away I guess.

That's what I think about all my billers too. Shit, it's only money...relax. 

[Skip8282]

These dealers need to get paid quickly.  Many of them have their inventories financed and the profit margin on new cars is low.

Still think it's a bullshit program though...

[drkaje]

They can't get car rebates processed in a timely manner, LOL!

Can anyone imagine them administering healthcare properly? At least auto dealers can say no. Even if your doctor goes bankrupt waiting for payment he's still legally obligated to provide service, maintain records 7 years, afford tail coverage or find you another physician while they tweak the system.

[Soul Crusher]

It hasn't even been that long?  How fast did these guys want their checks?  Like right away I guess.

The program said that they were supposed to be paid within 10 days of submitting the voucher. 

[drkaje]

The program said that they were supposed to be paid within 10 days of submitting the voucher. 

You'd have a better chance of getting paid within 10 days by putting teeth under your pillow.

No joke.

[astro]

T.A forgot to enlarge and bold this part of the story

"That gap may eventually drain the program of funds even as some car dealers wait for their sales to be processed, resulting in the government denying the rebate and forcing the dealer to eat the loss.   None of the dealers I spoke with said they could handle losing $3,500-$4,500 per car."

[Soul Crusher]

T.A forgot to enlarge and bold this part of the story

"That gap may eventually drain the program of funds even as some car dealers wait for their sales to be processed, resulting in the government denying the rebate and forcing the dealer to eat the loss.   None of the dealers I spoke with said they could handle losing $3,500-$4,500 per car."

This whole program is a scam.

Bidare had a good math calculation on this.  If he reads this, I hope he reposts it to show just how insane this is. 

[shootfighter1]

Nice to see the program worked on the sales end, unfortunately this is what often happens with government programs....it seems like a good idea initially but they fail to predict the unintended consequences.

[drkaje]

T.A forgot to enlarge and bold this part of the story

"That gap may eventually drain the program of funds even as some car dealers wait for their sales to be processed, resulting in the government denying the rebate and forcing the dealer to eat the loss.   None of the dealers I spoke with said they could handle losing $3,500-$4,500 per car."

People only care that cars were purchased and a few jobs regained.

So what if dealerships go out of business and there's no place the cars can be serviced?

[GigantorX]

What happens now that the Cash for Clunkers Program is ending?

Without the Govt. handing people money to buy cars, where will demand go?

[Soul Crusher]

What happens now that the Cash for Clunkers Program is ending?

Without the Govt. handing people money to buy cars, where will demand go?

Right in the toilet. 

In fact, many people will now put off buying a car with the thought or hope that a future $4500 welfare payment may be forthcoming courtesy of gigantor,TA, 240, Bindare, and the rest of the getbig community. 

[drkaje]

Right in the toilet. 

In fact, many people will now put off buying a car with the thought or hope that a future $4500 welfare payment may be forthcoming courtesy of gigantor,TA, 240, Bindare, and the rest of the getbig community. 

Corporate welfare.

[Bindare_Dundat]

But there's another reason why Cash for Clunkers may soon run out of gas. Customers are also losing interest in the program.

Information from the National Highway Traffic Safety Administration show that the daily pace of clunker program sales in recent days was about 17,500, down about 40% from the peak levels of 30,000 a day in early August.

Part of the slowdown in sales may be due to a limit to the number of customers who own clunkers who have the financial wherewithal to close a deal. In addition, automakers and their dealers are running out of the fuel efficient cars that have been popular with buyers.

[Soul Crusher]

But there's another reason why Cash for Clunkers may soon run out of gas. Customers are also losing interest in the program.

Information from the National Highway Traffic Safety Administration show that the daily pace of clunker program sales in recent days was about 17,500, down about 40% from the peak levels of 30,000 a day in early August.

Part of the slowdown in sales may be due to a limit to the number of customers who own clunkers who have the financial wherewithal to close a deal. In addition, automakers and their dealers are running out of the fuel efficient cars that have been popular with buyers.

Bindare - can you repost that math calculation you did on this?