johnnymk

http://www.greenvilleonline.com/arti...14/1004/NEWS01

The federal government approved its cash-for-clunkers sequel last week, and supporters hope the $2 billion new installment will continue the surge in auto sales and boost demand for fuel-efficient vehicles.

The incentive program, begun last month, has been a boon to Upstate car dealers and consumers, generating much-needed sales for dealers and significant savings for car buyers.

But as they prepared for the extension, there was concern about the government's ability to handle the process of reimbursing dealers for the new-vehicle purchases and what happens to the industry once the program ends.

Ed Rich, general manager of Dick Brooks Honda in Greer, said his business sold between 45 and 50 vehicles in the first phase of the program, but has yet to receive any government allowances.

The program appears to be such a success that electronic paperwork has bogged down computer systems, slowed the government's payment process and created stockpiles of old vehicles that won't be scrapped until dealers receive their allowances, Rich said.

“That's been the real stressing part — is just having someone sitting there trying to dot every ‘i' and cross every ‘t' and get those in,” he said. “We've got them in, but there's no approvals, no money has been transferred to our account and we've had nothing to tell us that they've been turned down.”

“I think that the dealer network in the country would feel great if they (federal officials) would just get enough people there to look at those documents and have the expertise to not spend a day looking at them, but look at them and say, ‘It's OK, it's OK, it's OK. Pay them,'” Rich said.

Officials with the National Highway Traffic Safety Administration, which is governing the clunkers program, couldn't be reached for comment.

Officially known as the Car Allowance Rebate System, it received an additional $2 billion Friday, when President Obama signed into law legislation extending the program.

Obama welcomed the extension, saying it would aid economic recovery and help the troubled auto industry.

Supporters also have hailed the program's effects on reducing carbon emissions.

Some skeptics, however, say the additional funds won't have the same impact as the first $1 billion, because many people who qualified for the program already have bought new cars and the supply of eligible vehicles is waning.

The program gives consumers up to $4,500 in federal subsidies for trading in cars that get less than 18 miles per gallon and buying new cars with better fuel economy.

Dealers are later reimbursed by the NHTSA.

The Automotive Aftermarket Industry Association also weighed in last week, saying routine vehicle maintenance for a year costs a consumer less than a monthly new car payment and would be more successful in reducing gasoline use and pollution than the clunkers program.

Vehicle maintenance would save consumers $30 billion in gasoline a year versus the government spending $3 billion in taxpayer dollars to buy new cars, the association said.

The trade group represents more than 100,000 repair shops, parts stores and distribution outlets.

As part of the clunkers program, federal officials provide a credit voucher to consumers trading in their older cars, either domestic or foreign models, when they buy or lease eligible new vehicles.

“People are doing exactly what the program said it was going to do,” said David Thomas, senior editor for Cars.com, on an online site for car shoppers that is owned by Gannett Co. and four other media companies. “They are actually turning in these large SUVs and these trucks” and shifting toward more fuel efficient mid-sized sedans and compact cars.

While there are good deals on some models — with significant cash back from dealers on top of the cash for clunkers incentive — sales of cars such as the Toyota Prius are spiking without rebates and price discounts, he said.

With lenders imposing much tighter credit conditions on consumers in the last 18 months, “Hopefully these people are not getting in over their heads, they're not buying more than they can afford,” Thomas said.

Rich, the general manager in Greer, said new-car buyers are choosing Honda Civics and Accords, while auto industry officials say other popular models include the Chevy Cobalt, Dodge Caliber, Ford Focus, Hyundai Elantra, and Toyota Corolla.

Despite the sales jolt provided by the clunkers program, Standard & Poor's says it sees another two years of hard times for the nation's auto industry.

“For U.S. automakers and suppliers, a jump-start out of the global recession will require more than a quick power surge,” S&P said in a research note.

And then there are car owners like Nick Tomlinson, a pharmacist from Timmonsville, who isn't ready to part with his 2003 Chevy pickup or his 1997 Chevrolet Lumina.

He also owns a 1967 Pontiac GTO, which averages 15 miles to the gallon. The two-door classic, which he drives selectively, will remain part of his automotive household, Tomlinson said.

He said the pickup gets “very bad” gas mileage, but he only uses it for hauling or towing.

That means Tomlinson uses the Lumina, which averages 25 to 30 miles per gallon, for his daily driving.

“As long as it keeps running, I'll keep driving it,” he said.

USA Today contributed to this report.

Chgoman

I know my Uncle's Ford Dealership in San Diego took in over 700 clunkers under the first phase of the program. They've submitted for abouta quarter million they are eligable for under the program and haven't received anything yet. It'll be interesting to see how long it takes to get the funds in.

Some dealerships in the area are weighing in on whether they should continue to participate in the program or not as clunkers have started taking over so much space at the dealerships and the uncertainty as to how long it will take for the government to pay up as well as wondering if the government will really pay it all or nit pick and reject some for stupid reasons. Even if a small percentage are rejected, it could easily eat up the profit from all the other sales.

Thesifer

If by nitpick, you mean comb over the records and see the car turned in vice the purchase, and make sure it actually meets the criteria, I sure hope they do.

But seeing how big the program and paperwork will be, I doubt they do. I'm sure many a car salesmen won't have a problem trying to scam the government.

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johnnymk

http://www.app.com/article/20090819/...r-breakingnews

NEW YORK — A New York dealership group says hundreds of its members have left the Cash for Clunkers program, citing delays in getting reimbursed by the government.


The president of the Greater New York Automobile Dealers Association says about half its 425 members have stopped offering rebates from the program because they can no longer afford them.
Mark Schienberg says the group's dealers have been repaid for only about 2 percent of the clunkers deals they've made, leaving many short on cash.
The program offers up to $4,500 to shoppers who trade in gas guzzlers for a more fuel-efficient vehicle. 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.

Thesifer

From what I hear, they just brought in 1000 more employees to comb through the rebate files. They'll end up sending a lot of them back to the dealer for more information from what I hear. As a lot of them have showed up not showing the make/model/year of the car being traded in, and various other errors in paperwork.

ray

Cash for Clunkers deal to end on Monday

http://money.cnn.com/2009/08/20/auto...ion=2009082016

johnnymk

Dealers have to pay "floor plans" for each vehicle they have on their lot. The plan allows for the vehicle to remain there with no charge for a certain period of time. And after that time, an interest charge is implemented.

Delays in receiving money from the federal government can quickly eat into any profits because of these interest charges. The federal government should have foreseen this problem and allow for additional payments to the dealers.

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Thesifer

I'm not really sure if anyone forsaw how well it would work in a recession. what is the "Floor plan" time? has that passed for most or what? Cause liked I said, and heard.. they brought in something like 1000 more people, and should be moving faster, except for the ones that they have to send back for more info, but that's the dealers fault if it gets kicked back because of their paperwork.

renovation

a friend of mine got a heck of a deal today (last day the dealer was doing cash for clunkers ) he traded in his 1988 f-150 for a 2009 or 2010 f-150 out the door it cost him $11,200 . that was less then the $15,600 he payed new for the old truck out the door 19 years later.

new truck - came with a bedliner ,air ,trailer hitch,bucket seats with foldup armreat,automatic trans , tilt ,am/fm stereo , lighter & ashtay,8 ft box

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guiseppewv

I think the dealerships and manufacturers are in for a hangover. They have been on a binge with the cash for clunkers and now that it is over sales are going to plummet in the near term.

Markel

Dealers aren't the only ones that the 'clunkers' may backfire on. How interesting that a couple of days after the program ends, the government says, "Oh, by the way, that $3500 to $4500 discount we gave you will be counted as income when you do your taxes for this year." A lot of people are going to have an unexpected tax bill next April 15.

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Daedalus

It depends on state and local tax laws. CARS rebates are not counted as income by the IRS.

Markel

I did some further reading (heard about this on the radio earlier today). It sounds like it's the dealers that will be on the hook for tax on the rebates.

mechmike0034

http://www.cars.gov/faq#category-06

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Daedalus

I hadn't heard about the dealers being taxed on it, but I don't see how they could possibly be taxed on anything beyond operating profit. Of course, Congress has the power to change the tax laws.

VTGreg

Nothing moves fast when dealing with the govt.

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