Cash for Clunkers Stress Management Classes
We are fortunate to have dozens of car dealers and consumers keeping us in the loop on what is happening on the front lines. The most popular complaints from auto dealers pertain to the CARS sales submission process and the lack of approved sales to give them assurances of being repaid.
Dealers are stressed about floating hundreds of thousands of dollars with not one sale confirmed or repaid. A new cottage industry could start with plenty of takers: Cash For Clunkers Stress Management Classes.
In truth, it’s not a laughing matter to car dealers who were already struggling with cash-flow due to slowing sales.
Looking For a Sign Of Hope
We are hoping that the NHTSA will get caught up this week and start to give dealers a reason to continue taking new CARS sales. If the NHTSA processing backup continues to delay confirmations much longer, dealers will have no choice but to stop accepting new CARS transactions. Only a handful of the most well funded car dealers can float millions without concern.
Consumers are also frustrated looking for a update on their submitted sale . Dealers have nothing to comfort them with because they are equally in the dark. (which reminds me of a mushroom story)
There are many emails we could share to demonstrate the stress at the dealer level but we picked this one that came in during the past hour: August 4th at 7:30 pm:
Just a heads up – I have talked to 3 other dealers – and no one has got paid $1 dollar yet. I have over $300,000 outstanding in CARS rebates and have been rejected 10 times so far. Some of them have been small mistakes on my end, and some make no sense to me. Here is a response (in green) to one of my cars that got rejected and the reason for it:
The voucher you have submitted with invoice number XXXX has been rejected for the following reason: Please recheck your entire transaction, you may have other errors that will further delay your payment..
The voucher can be resubmitted if the reason for rejection can be corrected.
Please see http://www.cars.gov/dealersupport for more information about the CARS program requirements. Please contact the CARS Help Desk at (866)-CAR-7891 for further assistance.
Seriously? Not one reason why it was rejected! I have to HOPE that I get it right when I resubmit….
I am truly happy for the traffic that the CARS program has brought, but the paper work NIGHTMARE is beyond ridiculous. I believe I will get paid on these, but in the meantime, I am literally having to “float” $300,000. Not a good thing….
Additional Cash for Clunkers Funding This Week
The Cash for Clunkers program $2 billion funding bill looks more promising today as some Senators have softened their objections to the additional funding. Car dealers like the one in this post would be put in a very difficult place if additional funding was not approved.
Cooler heads look like they are starting to understand just how underfunded and oversubscribed the CARS program is and will approve another $2 billion this week. We do not have a date certain when the measure will be taken up in the Senate but it has to be before they break for summer recess in Friday.
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14 Responses to “Cash for Clunkers Stress Management Classes”
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@ POdandWaiting…stop waiting. Check out today’s update on cars.gov, and go get your new car.
There are approx 20,000 dealers registered, not a “few” thousand. The govt handles Medicare, Medicaid, Vets Administration, and Federal Employees Health Benefits. NO ONE WILL BE REQUIRED TO SIGN UP FOR GOVT HEALTH CARE.
If the gov cannot handle payments to a few thousand dealers in a timely manner what is going to happen with 300,000,000 healthcare subscribers. CARS website says payments must be made to dealers in 10 days (NOT 10 BUSINESS DAYS) by law. We are now pushing 20 days. Where is the outrage in the press? Oh, I forgot, this is Obama not Bush so everything must be okay.
Had to renew registration for another year on the old car with our new car sitting on the lot collecting dust. BTW, like 4 out of 5 buyers, I bought a Toyota. Had Fords until now. Would never buy a union owned Chrysler or GM. Ford was clsoe but could not match Toyota. Japan must be happy with our bailout.
No Pete, you got $4550 for your clunker. Typical.
i’m in the same boat with ohioTim i have a new truck with payments/ins./regs. fees sitting in the the dealers lot because he will not release it till he gets paid from the cars program.
the dealers and the gov. should of did there homework before starting this program not wait till the last minute. how can you make a deal before you know the rules…
Is there a date for when senate voting begins??
Tim, what profit are you speaking of a dealer makes profit on the diff of cost and sale. The CARS rebate has no effect on either it does allow dealers the chance to profit due to more sales. Your statement is typical you don’t have a clue as to the amount of man hours it takes to submit transaction and other related cost. But dealers do appreciate the extra traffic again this program doesn’t have any extra profit for a dealer its a rebate not free money. the buyer is who gets the free money not the dealer.
I would really like to know if and how much car dealers are getting from the jumk yards for the clunkers. I just took delivery of my new car and traded in my old car and the dealer said all that they get from the junk yard is $50 per car.
Now my dealer never provided me with the written statement like they are supposed to which communicates the salvage value. I was thinking I would wait a couple weeks and contact the dealer and ask the dealer to provide me with a receipt from the junk yard showing that they only got $50 for my clunker – which was a 2001 Ford Explorer – in pretty nice shape too I might add.
@cashforc: Upon further review, I still would like to know the answer to my original question:
Would dealers rather NOT be selling all these cars?
Because you said they’re not getting ahead while the rebates are held up, but the reality is that they WILL get that money. So that PROFIT is on the way.
You also said they have to pay for things while they wait. Well, they’d be paying for those things without CARS but the PROFIT that they WILL GET wouldn’t be there.
So, I have to wonder: why are the dealers complaining so much and why are they holding people like OhioTim hostage while they wait for their profit?
Shouldn’t they be more grateful to people like OhioTim and all the others posting on here instead of holding them hostage?
I had a contract on a new car prior to the start of the program.
My dealer managed to get registered the first day.
My deal (the first for my dealer) was submitted the early morning hours of the second day (Tuesday) of the program.
The dealer still hasn’t heard anything from the NHTSA! I still don’t have my car because the dealer will not finalize and deliver until Uncle Sam approves the deal. Arghhhhh!
@cashforc: Thanks for clarifying. That actually makes a lot of sense and I appreciate you explaining the dealers predicament more clearly.
Stanley,
Yes they get some money (deal – rebates) but that money goes to pay floor plan financing, employees, overhead, etc. The vouchers represent more than their profit per car in most cases, so dealers don’t make any profit while this is happening and have to pay the bills with their bank credit reserves.
So the increase in sales, increases their draw on reserves and bank line. Dealers are selling cars outside the CARS program which is yielding some profit but the balance is off right now so dealers are net-net not getting ahead while the NHTSA holds up their rebates.
To clarify further:
Dealers ARE getting paid the REST of the cost of the cars they are selling, right?
So while they are “floating” the CARS money temporarily, they are CURRENTLY getting the REST of their money.
Right?
Thanks for the great info, cashforclunkersfacts.com!
I have a serious question for you and for dealers:
Where would this “floating” money otherwise be if it weren’t for the CARS program?
Meaning, if there was no CARS program to stimulate the “nightmare” of new car sales for dealers, then presumably some percentage of the current sales (likely a large %, given the volume being done by dealers) would not exist. That means that the alternative to “floating” money THAT MUST BE PAID BACK BY LAW to the dealers for these transactions, would be NO MONEY at all. Correct?
So, in all seriousness and with understanding of the real burden that CARS puts on dealers to get their money, I ask this question of you and dealers:
Would the dealers rather NOT have sold all those cars?
The following was reported early Tuesday by the Associated Press…
“…the clunkers program has recorded 157,000 transactions worth $664 million.”
A few conclusions (and serious concerns) can be drawn from that statement…
1. AT THE CURRENT RATE, VOUCHER PROCESSING WILL NEVER “CATCH UP”
CARS has been operational for 7 days, and they have processed 157,000 voucher applications. That boils down to 22,000 vouchers per day. If 20,000 dealers are registered, the CARS website is averaging roughly ONE voucher per dealer per day. At this rate, sales are easily out-pacing the rate at which the CARS website can handle applications. In other words, the system will NEVER catch up until sales have been halted for several days (or weeks)!
2. THE NUMBER OF UNSUBMITTED VOUCHER REQUESTS COULD BE HUGE
157,000 voucher requests have been processed…but every dealer says they have only been able to enter a fraction of their actual deals into the CARS website. The number of unsubmitted voucher requests could be in the HUNDREDS OF THOUSANDS right now.
3. CARS IS BURNING THROUGH CASH AT AN ALARMING RATE
CARS is processing voucher applications at a snail’s pace…and a large number of voucher requests aren’t even in the system. Yet CARS is still burned through $95M per day over the last 7 days. Not only is the original funding gone, they are easily well into the 2nd billion by now.