Video: Dealer Cash Flow: The Real Reason for the "Cash for Clunkers" Suspension

http://excarsalesman.typepad.com/cars/2009/07/the-real-reason-for-cash-for-clunkers-suspension-cash- ^ | 7/31/2009 | excar

[wrrock]

I've spoken with several dealers concerning the cash for clunkers program and this video sums up the current problem in great detail by shedding light on why the cash for clunkers program was suspended.

Watch Video: http://excarsalesman.typepad.com/cars/2009/07/the-real-reason-for-cash-for-clunkers-suspension-cash-flow.html

It is true the program is successful and will use allotted funds. But the situation is more sophisticated that that.

First, because of the popularity, there is a huge backlog of paperwork. The 20-page application requires data from various sources and in many cases takes days to complete. Dealers continue to sell cars while they wait for all the information required (e.g. insurance companies). If they continue to avance people the credit, on faith the government will refund them for destroying a car, their cash flow will soon be depleted.

Second, the CARS website where dealers submit the application cannot handle the traffic. Dealers continuously report website crashes and cannot submit their application. The only increases the amount of time dealers must wait before they receive their rebate check -- depleting cash flow.

Third, worry is building in many dealerships because many applications for the rebate are being denied after the car deal. Some on this blog have expressed outraged after dealers have called them back demanding the customer make up for the denied CARS rebate or else they would have to return the car immediately. Rebates have been denied for an untold number of reasons; including a blank field in the 20-page application.

So you see, even if the government institutes emergency funding guarantees, the cash flow problems, from an inadequate structural setup, remain.

[PapaBear3625]

Now, imagine these same government employees dealing with your health care.

[newheart]

so the government getting involved in the car business didn’t help? Who could have possibly anticipated that?

One interesting thing is that most of the brand and dealer association ‘cash for clunkers’ TV ads didn’t drop till this week. It will be interesting to see if they demand the government ‘make good’ on the money they spent in advertising a non-existent program.

[webschooner]

So now that we’ve seen how the goobermint has run this relatively tiny program, we can look forward to everything running every so smoothly if they take over every friggin American’s healthcare, right?

[bgill]

It had scam written all over it from the beginning. There’s been talk at the first about the difficulty of getting the clunker and the new vehicle both to qualify.

[badpacifist]

LETs see I am going to get you a loan that under normal circumstances you wouldn’t even be able to get..........sound familiar?

[bgill]

I saw a tv commercial still advertising it around midnight last night.

[PSYCHO-FREEP]

Golly gee....,

Imagine that, having trouble with another Government program. And who are the idiots who complain about the Government spending like this and then scramble over each other to be the first in line for a hand-out?

Wonder of wonders, HHhmmm........

[newheart]

I saw a Mercury version about 10 minutes ago.

[ScottinVA]

“Now, imagine these same government employees dealing with your health care.”

Exactly. I see it as a microcosm to the wonders the FedGov will do to health care, cap and tax, etc.

[earlJam]

Sheesh!

Can’t wait until I get my appendix out under O-care.

[bcsco]

A local dealership was running an add up through last night. If a dealer called and said I had to cover the rebate or return the car, I’d return the car. The purchase contract is no good if the dealer hasn’t upheld their side of the bargain. And if the paperwork is rejected because of a clerical error, then it’s the dealership’s fault.

Yes, I know the paperwork is ridiculous, but legally, the dealership is at fault.

[Kozak]

HAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHA

snort

HAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHA....

[Redleg Duke]

Back in 1990, the Government seized the Mustang Ranch brothel in Nevada for tax evasion and, as required by law, tried to run it. They failed and it closed.

Now we are trusting the economy of our country, our banking system, our auto industry and possibly our health plans to the same nit-wits who couldn't make money running a whore house and selling whiskey!"

[NEMDF]

Meanwhile, what if they already destroyed your car? There are probably going to be incidents of that happening.

[EmilyGeiger]

But, but, didn’t this work wonders in Germany and helped their economy? LOL, you just had to know that this is exactly what would happen. I need a new car but there was no way I was going to trust this gimmick. I’ll just keep driving my 200,000 + mileage SUV until it dies.

[bcsco]

Meanwhile, what if they already destroyed your car?

Then the dealership would be liable for the cost of that vehicle, based on the trade-in value. I'd sue to get my money back.

The dealerships are foolish to believe a program like this, run by the Feds, would be their salvation. Anything the government gets their hands into fails, and the government is the last to accept the blame.

[Ogie Oglethorpe]

"Back in 1990, the Government seized the Mustang Ranch brothel in Nevada for tax evasion and, as required by law, tried to run it. They failed and it closed."

You would think running a whorehouse would be the one thing government officials might actually be able to do well.

Personal experience and all... :-)

[wayoverontheright]

One of the hold-ups on the paperwork is that the dealers are being required to disable the engines by pouring two quarts of sodium silicate into the engine, to disable it. Many dealers do not have the solution yet to do so, so the crushers can't give them the signature the dealers need to submit for their money.

This is a boondoggle, for sure, but it has turned out to be the only private-sector stimulus that I'm aware of, and it obviously worked as a stimulus. The one billion spent pales in comparison to the trillion or so being sent to the public sector, with no positive benefit to the economy whatsoever.

This program clearly illustrates how misguided and wrong the original "stimulus" plan was, and validates conservative fiscal policy, IMO.

[VeniVidiVici]

Part of the problem is that the gov’t has been tweaking and readjusting combined mileage scores of “clunkers”.

For instance, back at the beginning of July just for giggles I went to see if my 1998 Buick Park Avenue was eligible. As its combined mpg score was 18mpg, it was eligible.

Then I heard that the gov’t was changing vehicle combined mpg numbers after the program had started!! So I checked again. Sure enough my Buick was now rated at 19mpg and thus ineligible for the program.

So if I had traded in my car the dealer would now be coming after me for the gov’t money they were now not going to get.