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Car Dealers Waiting To Get Paid As Cash For Clunkers Program Coming To An End

According to Carroll Smith, the owner of the Pasadena dealership said that since the inception of Cash for Clunkers program in July, many have taken advantage of this incentive program to purchase Monument Chevrolet.

Under this program, up to $4,500 off the value of a new vehicle is taken up by the dealership and the amount is reimbursed by the federal government. But Smith is facing a problem and it is that he has not yet received any payment from the federal government for any of the transactions made till now.

Because of the Cash for Clunkers program, a large number of consumers rushed towards vehicle showrooms and bought cars, thus giving a boost to the sales of the dealers that they really needed. But Smith and several other dealers say that the government is too slow in paying back to the dealers, as a result of which they have come under financial constraints.

In the mean time, the National Automobile Dealers Association has recently announced that they had a meeting with the US Department of Transportation in which they had discussed about suspending the program. According to NADA, the dealers who are accepting additional deals under the Cash for Clunkers program are increasing their risks of not getting reimbursed because $3 billion is just about to finish.

In another developing news, Ray LaHood, the Transportation Secretary has assured the dealers that they will surely be paid and announced that more details of the program will be provided.

With every car sold taking off $3,500 - $4,500 from the vehicle’s price, Carroll Smith is coming under more cash deficit position due to the Cash for Clunkers program. Smith said that the dealers earn a profit of around $1000 or even less with every new car on an average.

Dale Early, the owner of Deerbrook Forest Chrysler Jeep, said that it is a huge financial strain for a person who does several transactions in a short period of time. He also said that handling the volume was not a part of the government’s preparation for the program.

He said that the government has not paid for the transactions he made under the Cash for Clunkers program. But fortunately, he has been able to make other deals in his showroom because of the people who found more attractive deals that do not come under the program or those who did not quality for the program. The program of Cash for Clunkers allows the customers to bring their gas guzzlers and get a voucher of up to $4,500 with purchase of a new and more fuel efficient vehicle.

Rebecca Linland, the industry analyst at the HIS Global Insight, said that the pace of the federal government to reimburse the dealers is very slow across the nation and this is a big problem. If the dealers are not paid soon, they may get into very serious problem in terms of their cash flow.

Linland noted that the dealers are not ready for floating money as she heard about a Virginian dealer who is owing $3 million that the government has to reimburse him.

NADA reported that the dealers have received only a fraction of the reimbursements to be made by the government. The spokesman for NADA, Charles Cyrill, said that there is an urgent need to fix the problems. Earlier, Cyrill had noted that the US Department of Transportation had informed NADA that it is going to increase its staff size so that the processing can be made faster.

Sasha Johnson, the spokeswoman of the department said that they are working overtime and incorporating several resources into the program so that the applications can be processed both responsibly and quickly. Sessions are also being held between the department and the dealers to stress upon the significance of submitting complete applications, without any mistakes.