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Cash For Clunkers Leaves Dealers in the Lurch

An overwhelmed bureaucracy has left auto dealers with massive cash flow problems as they await government reimbursement.

by
Brian Douglas

Bio

August 18, 2009 - 12:39 am
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The bill that Congress passed authorized $50,000,000 of the first $1 billion for administration, an amount that most reasonable people would find generous even by beltway standards. But it was only after the system began imploding, and the National Automobile Dealers Association along with a few members of Congress raised a fuss, that NHTSA officials increased the number of people processing transactions from 200 to 1,200 to clear the logjam. In the meantime, no one predicted when the money would run out.

Under the circumstances, it’s little wonder that a few dealers decided to share their uncertainty with Clunker customers by asking for a signed agreement to assure that the dealership would be compensated if the government rejected the deal. Under the rules, the Clunker trade’s engine would be zapped and the vehicle scrapped. When hearing of these documents, NHTSA quickly posted an advisory on its Cars.gov website for consumers to not sign contingency agreements and that the dealer must allow the customer to take immediate possession of the new car if it’s in stock. Consumers are urged to report non-conforming dealers by dialing a CARS hotline, assuming they have the legendary patience of the biblical Job.

If the majority of the 80 percent of Clunkers credit submissions that have been rejected by overwhelmed bureaucrats are remedied soon, perhaps then we’ll know how much money, if any, is left in the pot. NHSTA officials have made it clear that when the money is gone, any pending deals will not be honored.

Patricia Oladeinde, an agency spokeswoman, told a San Francisco Chronicle reporter that a “real-time ticker” would let dealers know how much money was left in the pot. But dealers surveyed have no access to such a ticker, and the same spokeswoman stated that access was not available to the public or inquiring reporters.

If the Clunkers program was run like this by private enterprise, it would be a full employment act for lawyers. Of course, you can’t sue Uncle Sam unless he agrees to the suit. And don’t expect anyone in the government to do hard time, or even apologize, for causing a few dealers to bite the dust when this “successful” program ends.

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Brian Douglas has driven everything with wheels during his career in the automotive technical, marketing, and journalism professions. He is currently a contributing expert for KGO Radio, WHEELS editor for the San Francisco, Washington, DC, and Baltimore Examiner newspapers, automotive features writer for the Minneapolis/St. Paul Times Tribune, and automotive editor for Gentry and Ranch & Coast magazines.
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