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Cash for Clunkers Restarts
White House officials are saying that the Cash For Clunkers program will continue despite possibly using up all of the initial $1 billion dollars in funding. The White House is exploring ways in which to obtain this additional funding, and we will keep you posted as soon as we know more. The White House is saying, the program should be running as normal.
Translation: Get out and buy a new car quickly before they change their mind.
Consumers are encouraged to continue participating in the Cash For Clunkers Program, officially known as C.A.R.S. (Car Allowance Rebate System). Dealers have been assured that they will be reimbursed for all qualifiying clunker trade-ins.
This morning the NHTSA has taken off the “Money Gauge” from their website.
The official news later today can take many forms but it is clear that the NHTSA has to get an accurate count of how many sales have been done to date if the $1 billion in funding is not significantly increased.
The root of the problem that caused this panic was the disconnect between the flow of sales and the input of sales data into the NHTSA system. For most dealers, one or two people inside the dealership were assigned to input sales which is a small ratio to the number of sales staff taking deals.
The backlog of deals done before July 27th combined with the rush of consumers to buy cars overwhelmed both the NHTSA systems and car dealer data entry staff.
Problems Surfaced on Day One
When dealers started entering sales on Monday they found out that the NHTSA web based sales entry system was cumbersome, cryptic and unable to handle thousands of simultaneous transactions. Dealers started to report to CashForClunkersFacts.com their woes on Monday.
For many dealers, day one and day two resulted in zero sales being input. On Tuesday we predicted from our survey data that the program could be out of money by August 1st. Some laughed and said that we were hyping the program to start a “run on the bank”. We just were good at math, not hype.
Entering Sales Is Like A Root Canal Without Novocaine
When dealers could enter in a CARS sales transaction, the entire process with document scanning, compliance checks and data entry took about 90 minutes. This doesn’t count for the time dealers had to add to the process by calling back buyers to sign additional paperwork that was released as part of the Final Rule on Friday July 24th.
Some dealers in out survey data on Tuesday had 20, 30, 40 and up to 70 sales completed and none in the NHTSA system.
When you step back and do the math, the NHTSA was wise to consider suspending the program until the backlog of sales could be entered. Unfortunately for car dealers and consumers, any suspension in the program will be costly. It could take 2-3 weeks for all sales get entered into the NHTSA system based on the sporadic reliability of the technical infrastructure that is in place.
Dealers have spent thousands of dollars to prepare for the program and shutting it down in five days would be disastrous to businesses that already have struggling cash-flow and negative bottom line trends.
The Infamous 5 Day Government Program?
The Associated Press yesterday in a press release spun the CARS program as “wildly popular“. This program has been a wild ride but if you read the feedback from dealers and consumers, the program rules and the process for those that qualified is far from popular.
One dealer commented that the CARS program is the most burdensome program ever handed to car dealers at a time when their cash-flow and staffing are at an all time low.
We believe that the program, popular or unpopular as it may be, will get additional funding next week. We don’t think it will be an easy sell next week but we hope that both sides recognize the damage that will be done if additional monies are not approved.
We are also hearing that the NHTSA is adding staff to handle the review of dealer sales paperwork. Dealers are advised to review all documents before they are submitted. Reports have said that many dealers are having their submissions rejected for simple errors.
Cash for Clunkers Petition
Consumers who have been excluded based on the current wording of the CARS program rules are hoping that additional funding would come with relaxed rules. Thousands have already added their name to the online petition at: www.nocashforclunkers.com
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49 responses on “Cash for Clunkers Restarts”
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I have been waiting a week for my Toyota dealer to finalize my sale with this program. They continue to tell me the request is being denied and they do not feel it will go through. Can you tell me if people are really denied for reasons unknown to me? I have all the requirements: 2 years of registration, 2 years insurance and a clear title….but can’t buy the new car without the rebate.
Thanks.
Hello,I requested abt the Clunkers program tht I had one thru the mail but my grandson done accideint throw my clunkers mail and want to know how would I able to get my trunk to trade in and Please email me back soon as u can,okay!,thanks so much!!
The cars incentive is retroactive to JJuly 1st. The reason the money was gone in “a day” was that it applied to all qualifying sales for the last 4 weeks. Why does this tidbit of info not come up? Maybe dealers don’t want to give the money back to qualified buyers and wait for a voucher.
I wonder how many people are buying these cars outright and not financing them
Given that a lot of economists are expecting any recovery to be stalled by higher interest rates and/or inflation in response to the Fed’s printing press solution to the government debt created by the bailouts and PorkZilla, now isn’t a very good time to jump into a new car payment and higher insurance costs. The new vehicles may get better gas mileage and are under warranty, but the fuel cost and maintenance savings aren’t going to offset the debt payments.
I hope the NHTSA is keeping track of what new cars were bought under this program. I’m guessing that after it’s all over, the Japanese car brands will have increased their market share thanks to the US Government.
Caveat emptor(Buyer Beware). I find this Bill offensive. And to add insult to injury, they have added an additional 2B today. This is the American people’s money, don’t give it to away so they can get into deeper in debt. Most people that drive clunkers do so because they “have to”. My prediction is that in 6 mo to one year, there will be a record number of Repo’s. Sounds just like the Mortgage fiasco with record foreclosures? BROKE PEOPLE SHOULD NOT BUY NEW CARS OR HOMES. Please do the math and think it through, your new car will lose 40-50% of its value in two years. You would be better off driving your clunker for two years and saving your money intensely and then buy a newer car outright with cash. If you can’t do that than you are too BROKE and should not buy a car.
I’m with The Animal but I think his guess is too optimistic. Using even the lower end numbers from comments posted on this website, the total Cash For Clunkers sales that have been made so far would result in voucher payments to those dealers in excess of $3 billion. My guess is that the reality is that the extra $2 billion is already spent and just waiting for the dealers to be able to get them entered into the system. For everyone who is saying that there is still plenty of money left, you are in denial, and I don’t mean the river in Egypt. If the dealers, who are on the front line of the program, and can see the volume of sales at their own dealerships, and at dealerships owned by friends, are running scared s—less because they expect that the money is already gone, you can take that to the bank
The Animal: The first billion was not gone in a day. It’s been a week and part of the problem is that they don’t really seem to know how much is left. The second billion hasn’t even been approved yet.
Sounds like alot of dealers didn’t bother to READ the rules. They have to COMPLETE the transaction and DISABLE THE ENGINE send the title to the scrap yard. Then they can submit for the government rebate. All AFTER the customer has taken delivery of the NEW vehicle. Come on read the rules before you start B.S.ing the customers. I see alot of lawsuits coming with the way these shady dealers are operating. No one forces them to register for the program, they don’t have to participate in the program, but at least
follow the rules and stop messing it up for those that do.
As a 5 franchise dealer I can tell you this is what is happening.
1 of our stores has still yet to even receive the code to submit to funding. They are turning away clunker deals at this point because there is no guarantee there will be money left by the time we get the code.
Another one of my dealers is registering and rolling the clunker deals they have been able to submit.
The problem here is that the DEALER is ultimately held responsible and is left holding the bag if uncle sam stiffs us.
This could be a great program if it was better thought out.
So to answer Dan’s question… It really depends on your dealer. If you signed bank contracts that were completely filled out and nothing was left blank than you are probably ok with the tax and the incentives.
IF HOWEVER, your dealer had you sign blank contracts that would be completed when they received more info, you will be out and paying more tax and risk losing dealer incentives.
Lastly, remember this. The first billion was spent in a day. How long will the other 2 Billion last? My guess – it will be gone by monday. Have a great weekend!