Cash for Clunkers is killing the car industry.
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Car dealers are growing increasingly impatient with the government's slow pace in reimbursing them for accepting trade-ins as part of its popular "Cash for Clunkers" program, even though Transportation Department officials say they are working to address the delays.
The National Automobile Dealers Association estimates that dealers have hundreds -- and in some cases thousands -- of applications pending that are "worth hundreds of thousands or millions of dollars."
In Maryland alone, dealers have put in $36 million in claims under the clunkers program but have been reimbursed for only about 2 percent of the total, said Peter Kitzmiller, president of the 325-member Maryland Automobile Dealers Association.
"It is ludicrous at this point," Kitzmiller said. "We've got deals that are just sitting there waiting to be reviewed. The customer is gone, the car is gone, and you don't have your money."
Under the program, people who scrap their gas guzzlers can get a voucher worth up to $4,500 toward a new, more fuel-efficient vehicle.
Dealers essentially front the money for the cash incentive with the understanding that the government will reimburse them once they file the necessary paperwork online and the deal is approved.
Fitzgerald Automotive, one of the largest Washington area dealerships, says it is owed $2.7 million from the government. Darcars, another large area dealership, says it is owed $5 million after taking in roughly 1,300 vehicles.
To deal with the issue, the National Highway Traffic Safety Administration said it is tripling the number of workers who are processing claims to 1,100 contract and federal employees. Trade groups are offering Web seminars to help dealers figure out how to properly submit paperwork so they get their money faster.
In the roughly three weeks since the program officially began, 411,624 transactions, worth $1.7 billion, have been submitted, according to government numbers released Tuesday.
Most of the clunkers traded in were trucks and sport-utility vehicles. Toyota Corolla, Honda Civic and the Ford Focus have been the top three new vehicles bought under the program.
To keep up with demand some automakers have said they are increasing their production.
For the first time since filing for bankruptcy, General Motors is hiring back workers to meet higher-than-expected demand for cars and trucks. The company will reinstate 1,350 workers and add overtime for about another 10,000, the result of a broad surge in sales at least partly due to the clunkers program.
The rehires represent only a small portion of the tens of thousands of GM workers who have been laid off in recent years, but the news is a marked turnaround from just months ago when the company was undergoing bankruptcy proceedings.
"We're running much hotter," said Mark LaNeve, GM's vice president of U.S. sales.
Most of the jobs will be added at the company's Lordstown, Ohio plant, where the Chevy Cobalt, a small car, is built, while others will be added in Ontario.
The news from GM follows Ford's announcement last week that it is boosting North American production to meet the increased demand spurred by the clunkers program.
Ford said its third-quarter output would rise by 10,000 vehicles to 495,000, primarily because of increased demand for Escape small utility vehicles and Focus small cars, the two most popular Ford vehicles under the federal incentive program.
The problem here is that the "promised" incentive money is not being produced. What is going to happen is that the lay offs are going to increase if the funding does not come in soon. The car companies will have to claim bankruptcy as they will not be able to pay the employees what is owed to them and then of course with the large surplus of cars they will have just sitting around...well you see the point here.
I said from the beginning that this was a good idea gone really bad. With the national debt being what it is...how and or where will this agreed upon funding come from?
I Never Agreed to This...I never Said this was a good idea...Did You?
It is also driving up the prices of used cars already...
ReplyDeleteA personal anecdote on this one. My 21 year old fell into enough cash for a $4000 down payment. He has a 12 year old car that would be perfect for the cash for clunkers program because it would be one of those trade ins that dealers take and throw on the back, back, BACK row of their lot. Right next to the garbage dumpster, lol. Anyway, my son picked out a nice little Pontiac Vibe, we drove it and he liked it. It gets like 32 mpg, so again, his trade in qualified. Once we got to talking to the dealer, he said that he won't do the CFC program anymore because he hasn't gotten paid by the Government on any of his deals yet. He then pointed to an entire row of CFC trade ins...
My but isn't our Government efficient. We go back tomorrow and will see what the dealer gives him for his trade in - NON CFC.