‘Clunkers’ Program Has Repaid 17% of Dealer Filings (Update2)
By Angela Greiling Keane and Keith Naughton
Sept. 3 (Bloomberg) -- The U.S. “cash for clunkers” vehicle trade-in program has repaid 17 percent of dealer rebate applications nine days after the filing deadline, and is hiring more workers to process the paperwork, an official said today.
The program, which has come under criticism from retailers for what they say is slow reimbursement, has approved 120,000 filings from the almost 700,000 sales generated. The $3 billion effort has paid about $500 million, said the Transportation Department official, who declined to be identified.
That pace is accelerating, and by the end of next week the government expects to be approving about $100 million a day, the official said. Even as the initiative spurred the first monthly gain in U.S. auto sales since 2007, led by Ford Motor Co., Toyota Motor Corp. and Honda Motor Co., dealers have said they’re being squeezed as they await repayment.
“When you’ve got all your working capital strung out to the federal government, that’s a problem, a real problem,” Charlie Howard, staff counsel of the Ohio Automobile Dealers Association, said in an interview yesterday. “The program brought a lot of people into the showroom, but we’ve got bills to pay, too.”
The Transportation Department intends to repay all eligible dealer submissions by Sept. 30, said the official.
The agency plans to increase the workforce for the program to 5,000 employees by the end of next week from about 3,000 now, the official told reporters. Most of the new employees will be contract workers, the official said. Citigroup Inc. has a $7.7 million contract to handle the paperwork, the agency has said.
Covering Loans
Dealers who borrowed money to buy the cars they sold through clunkers need the government to reimburse them to cover those loans, Howard said.
Some are having difficulty meeting their payroll as they await their clunkers cash, he said.
The government’s rate of reimbursement to car dealers for the clunkers program “is absolutely horrible,” Howard said. “The program was fantastic in stimulating the economy and moving the metal. But the back side is the dark side of this program.
It’s been a disaster.”
The National Automobile Dealers Association, based in McLean, Virginia, found in an Aug. 27 survey of its members that 5.7 percent of clunkers deals had been reimbursed.
The retailers have complained about the application rejection rate, which the Transportation Department official said is declining.
The government has seen examples of multiple resubmissions, some of them clerical errors such as transposed VIN numbers, the official said.
Ford, Toyota and Honda all reported more August deliveries than a year earlier, while General Motors Co., Chrysler Group LLC and Nissan Motor Co. fell. The industry total rose 1 percent from August 2008 to 1.26 million, according to data compiled by Bloomberg.
Everything I had stated earlier has come true. The program is being defined a "disaster", and both GM and Chrysler did not see the gains their private competition has seen. Gee its great when the government gets involved.
