Published: Friday, August 21, 2009
County car dealers will miss boost from ‘Clunkers'
Despite hassles, program brought needed business
When the federal Cash for Clunkers program ends Monday, Mark King will breathe a little easier.
The general manager of Roy Robinson Chevrolet and Subaru in Marysville says the trade-in incentive program has been good for business and even better for customers, but he's glad it's winding down. The federal government owes his dealership hundreds of thousands of dollars, and he'd like to get paid.
“The program was a great idea,” he said. “And successful in what it's done in terms of creating new car business. For the consumer, how do you go wrong?”
But dealing with a federal bureaucracy overwhelmed with demand hasn't been such a treat for King, whose dealership has processed about 75 clunker deals since the program started last month.
Thursday morning, King finally saw the first reimbursement payment — for just three cars. That means the dealership is still waiting on roughly $300,000 from the government.
“It's a lot of exposure for us, for a cash-flow situation hanging out there,” King said.
The U.S. Transportation Department announced Thursday that the wildly popular Cash for Clunkers program will come to an end Monday, about two weeks sooner than expected. Now, consumers on the West Coast have until 5 p.m. to trade in their clunkers for a more fuel-efficient car and a rebate of $3,500 to $4,500. Dealers are being warned not to submit applications for reimbursement after Monday; they might not be accepted.
The program was implemented by the Obama administration last month in an attempt to stimulate the economy and get gas-guzzlers off the streets.
The rebate program has generated more than 457,000 in sales, according to the National Highway Traffic Safety Administration. At last count, dealers across the country had made almost $2 billion in deals. Congress recently agreed to bump the program's funding to $3 billion in order to accommodate demand.
But with demand came frustration. Like Roy Robinson, many dealerships reported disconcerting delays in the reimbursement process. Trade groups such as the National Automobile Dealers Association report some dealers have withdrawn after discovering how complicated the process can be.
Dealers typically borrow money to put new cars on their lots and must repay those loans within a few days of a sale.
The NADA cautioned members Thursday that if they continue to process Clunker deals, they're risking that their transaction could take place after the program's $3 billion pot is dry.
“Dealers who accept additional ‘Clunker' deals face a growing risk that they may not be reimbursed,” said a statement from the group.
Transportation officials said Thursday that conservative estimates indicate there's enough money in the program for applications to be accepted until the Monday deadline.
“Now we are working toward an orderly wind down of this very popular program,” Transportation Secretary Ray LaHood said.
Federal officials say they've reviewed about 40 percent of the transactions so far, and spent $145 million reimbursing dealers.
General Motors officials announced Thursday they'll advance dealers the money they're owed in an attempt to keep them from pulling out of the program.
President Barack Obama said Thursday dealers would “get their money.”
That's good news for King, who watched his Marysville dealership's inventory quickly deplete during the last few weeks. Usually, the dealer keeps between 70 and 80 Subarus on the lot.
They were down to three a few days ago.
“As a dealership, we're definitely more for the program than against it,” King said. “But the government did not realize how strong it would be.”
This report contains information from the Associated Press.
Amy Rolph: 425-339-3029; arolph@heraldnet.com.
The general manager of Roy Robinson Chevrolet and Subaru in Marysville says the trade-in incentive program has been good for business and even better for customers, but he's glad it's winding down. The federal government owes his dealership hundreds of thousands of dollars, and he'd like to get paid.
“The program was a great idea,” he said. “And successful in what it's done in terms of creating new car business. For the consumer, how do you go wrong?”
But dealing with a federal bureaucracy overwhelmed with demand hasn't been such a treat for King, whose dealership has processed about 75 clunker deals since the program started last month.
Thursday morning, King finally saw the first reimbursement payment — for just three cars. That means the dealership is still waiting on roughly $300,000 from the government.
“It's a lot of exposure for us, for a cash-flow situation hanging out there,” King said.
The U.S. Transportation Department announced Thursday that the wildly popular Cash for Clunkers program will come to an end Monday, about two weeks sooner than expected. Now, consumers on the West Coast have until 5 p.m. to trade in their clunkers for a more fuel-efficient car and a rebate of $3,500 to $4,500. Dealers are being warned not to submit applications for reimbursement after Monday; they might not be accepted.
The program was implemented by the Obama administration last month in an attempt to stimulate the economy and get gas-guzzlers off the streets.
The rebate program has generated more than 457,000 in sales, according to the National Highway Traffic Safety Administration. At last count, dealers across the country had made almost $2 billion in deals. Congress recently agreed to bump the program's funding to $3 billion in order to accommodate demand.
But with demand came frustration. Like Roy Robinson, many dealerships reported disconcerting delays in the reimbursement process. Trade groups such as the National Automobile Dealers Association report some dealers have withdrawn after discovering how complicated the process can be.
Dealers typically borrow money to put new cars on their lots and must repay those loans within a few days of a sale.
The NADA cautioned members Thursday that if they continue to process Clunker deals, they're risking that their transaction could take place after the program's $3 billion pot is dry.
“Dealers who accept additional ‘Clunker' deals face a growing risk that they may not be reimbursed,” said a statement from the group.
Transportation officials said Thursday that conservative estimates indicate there's enough money in the program for applications to be accepted until the Monday deadline.
“Now we are working toward an orderly wind down of this very popular program,” Transportation Secretary Ray LaHood said.
Federal officials say they've reviewed about 40 percent of the transactions so far, and spent $145 million reimbursing dealers.
General Motors officials announced Thursday they'll advance dealers the money they're owed in an attempt to keep them from pulling out of the program.
President Barack Obama said Thursday dealers would “get their money.”
That's good news for King, who watched his Marysville dealership's inventory quickly deplete during the last few weeks. Usually, the dealer keeps between 70 and 80 Subarus on the lot.
They were down to three a few days ago.
“As a dealership, we're definitely more for the program than against it,” King said. “But the government did not realize how strong it would be.”
This report contains information from the Associated Press.
Amy Rolph: 425-339-3029; arolph@heraldnet.com.
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