Thursday, August 20, 2009

Re: Clunkers Fail

Two very important developments since I last posted on the debacle that is Cash for Clunkers:

1) Multiple reports of dealers leaving the program. Here's the Washington Post summarizing:
Dozens of auto dealers in the New York area and at least one in Maryland are pulling out of the U.S. government's popular "Cash for Clunkers" program because of problems in getting reimbursed.

The general manager at Toyota of Bowie said the dealership stopped participating earlier this week because it cannot afford to advance the money for more rebates while waiting on the government to pay. And about half of the 425 members in the Greater New York Automobile Dealers Association have also left the program, according to the group's president.

"We're sitting with $1 million out," said Jim Bee, general manager of the Toyota of Bowie dealership. He said he has taken in between 150 and 160 clunkers and has not been paid a dime from the government.


"Let's say we've given the customer a $4,500 voucher," Bee said, "we've given that money in good faith. But if the clunker isn't approved, we'll have to eat that $4,500."

Mark Schienberg, the president of the New York area automobile dealers group, said the government needs to speed up the approval process because dealerships are cash-flow businesses. He said many of his members have complained about the length of the 10-page-plus application and about rejections that do not give clear explanations of what the problem was. If dealers that are already living hand-to-mouth do not get repaid soon, he said, it could force them into bankruptcy.

"The program was becoming too difficult for them to get through, and they couldn't float any more money," Schienberg said of the dealers that have pulled out.
2) RIP Clunkers. On August 24, 2009, this awesome "success" will terminate. Amazingly, the US Government made no mention of Development #1 in announcing the time of death. The WSJ explains:
The government's "cash for clunkers" incentive program will end Monday at 8 p.m.., a month after it began.

The $3 billion program provides vouchers of $3,500 or $4,500 to consumers who trade in older, less fuel-efficient vehicles for new ones that get better gasoline mileage. It has emerged as a successful economic-stimulus program and helped boost hard-hit auto makers.

"It's been a thrill to be part of the best economic news story in America," Transportation Secretary Ray LaHood said in a statement. "Now we are working toward an orderly wind-down of this very popular program."

The move comes as the department tries to get an accurate accounting of how much money is left in the program, formally called the Car Allowance Rebate System.

The Transportation Department said the program recorded more than 457,000 dealer transactions valued at $1.9 billion in rebates.

Mr. LaHood said the program's conclusion Monday night will allow car dealers and buyers "plenty of time" to finalize purchases and submit applications for rebates.

"Based on conservative estimates of valid transactions so far, DOT analysts have projected that there is enough money to continue accepting submissions until the Monday deadline," the agency said in a statement.

And the AP starts placing blame (after, in typical AP fashion, calling the program a "success" without a shred of evidence of that):
The responsibility for the $3 billion stimulus program's flaws is widely spread.

—Congress—relying on auto industry forecasts that the program wouldn't have a major effect on moribund sales—deeply underestimated how many people would be lured to dealerships by rebates of up to $4,500. Initially, lawmakers committed just $1 billion, an amount that was burned through in just a few weeks.

—Transportation Department officials, presented with just 30 days to get the program up and running, didn't set aside enough staff or resources and were overwhelmed by the heavy response from consumers. Systems set up to handle and reimburse dealer claims were swamped.

—Government rules to prevent fraud created paperwork requirements that many dealers didn't fully understand.

—Hungry for sales, dealers made Cash for Clunkers deals weeks in advance even though they were advised against it. This created a big backlog the moment the program officially began. And many are still filing bad paperwork that is holding up their claims, despite repeated government attempts to clear up the confusion.
And liberals really want these guys in charge of the American health care system? Of one-sixth of the US economy?


Anyone want to bet me that next Monday is not the last we've heard of this "success"? (And I don't mean in a good way.)

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