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Car dealers steamed about slow pay on Cash for Clunkers
By STAFF AND WIRE REPORTS
Published:
8/19/2009 6:22 PM
Last Modified: 8/19/2009 6:22 PM
U.S. Transportation Secretary Ray LaHood assured car dealers Wednesday that they will be reimbursed for the money they have fronted to customers buying vehicles under the Cash for Clunkers program.
LaHood was responding to complaints over a backlog of rebate payments. Dealers must cover customer rebates out of pocket and wait for reimbursement from the federal government. Some have said their reimbursement requests have not been approved, leading to a cash crunch. That’s key because dealers typically borrow money to put new cars on their lots and must repay lenders within a few days of a sale.
“I know dealers are frustrated. They’re going to get their money,” LaHood told reporters in Washington, D.C.
In Tulsa, dealership owner Henry Primeaux said he has yet to receive a single refund from the Department of Transportation on $450,000 worth of rebates his company has submitted.
“We’re going to run out of money pretty fast,” said Primeaux, owner of Primeaux Kia. “That’s a lot of money out of our pocket. Luckily the bank has worked with us up to this point.”
Primeaux Kia will continue to offer the program until it is over, he said.
Danny’s Auto Salvage in Tulsa had been expecting to process dozens of vehicles by now, but owner Dale Pittman said dealerships are not sending cars to be crushed until they receive payments.
“Really what it’s doing is hurting the dealers that have to put up the money,” Pittman said. “And we’re just here waiting for the cars.”
LaHood’s assurances came as a growing number of dealers ceased offering the program. A group representing New York metro dealerships said Wednesday that hundreds of its members have withdrawn from Cash for Clunkers, citing delays in getting reimbursed.
Other dealership groups across the country say their members have stopped extending new Clunkers deals out of fear they will be repaid late or not at all.
The withdrawals are the latest snafu for a program that has managed to be both a huge hit, yet also a major administrative headache, for the struggling auto industry. Through early Wednesday, auto dealers had made deals worth $1.81 billion and were on pace to exhaust the program’s $3 billion in funds in early September.
The program offers car buyers rebates of $3,500 or $4,500 for trading in older vehicles for new, more fuel-efficient models and has generated more than 435,000 vehicle sales.
LaHood said the Obama administration would soon announce how much longer the car incentive program will last. The financial arms of several automakers have begun offering help to cash-strapped dealerships, in some cases by floating loans to help cover clunker-related shortfalls. Toyota Financial Services is offering loans to dealers for up to 60 days to cover the lag between a dealership’s payment and its reimbursement.
“That time lag is what it really boiled down to,” said TFS spokesman Justin Leach. “We saw that as a potential issue.”
The financial-services arms of Honda Motor Co., Nissan Motor Co. Ford Motor Co. and other automakers are offering similar programs to help cover potential cash shortfalls at dealerships participating in the program.
The government’s online reimbursement system was flooded with reimbursement requests shortly after the program began in late July, overwhelming the computer system and staff set up to process the deals. That led to big delays for dealers trying to file the paperwork they needed to get paid back for the rebates.
LaHood said some of the submitted paperwork has been incomplete or inaccurate, leading to delays. He acknowledged that the Transportation Department did not have enough people to process the paperwork but that it has been ramping up staff.
DOT said earlier this week it was tripling its work force to handle the rebates and expected to have 1,100 workers dealing with the paperwork by the end of the week.
“This is a wildly popular program. It’s been a lifeline to the automobile industry in America — it’s helped put people back to work,” LaHood said.
The Tulsa World Business section wants to hear about the inventive ways people are cutting costs and adjusting budgets during these economically hard times.
Of course, there are the common saving techniques — dining out less, setting the thermostat higher in the summer and lower in the winter, or using coupons.
But what unusual, interesting or fun strategies are you using to make those dollars stretch further? Inquiring minds want to know.
Readers are invited to send us their savings suggestions by Aug. 21. We’ll publish and share some of the submitted ideas, along with the names of those who sent them, so that others can put the tips to use.
We also would like to interview some of the respondents, so please include your name and phone number. Send information to web@tulsaworld.com, fax 581-8353 or mail to Tulsa World, P.O. Box 1770, Tulsa, OK 74102, attention Laurie Winslow, Business Section, Money-Saving Ideas.
Click here to send your ideas directly to web@tulsaworld.com
By STAFF AND WIRE REPORTS
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spirit07
, Tulsa (8/19/2009 6:35:57 PM)
Just wait you greedy little piggies. Your inflated car price money will come and you can pay your child support and alimony. Relax, and clean your polyester suits and white shoes.
Report Comment
emotional_sting
, tulsa - (8/19/2009 7:09:05 PM)
ok.. this obviously isn't working so great, so
what will happen when doctor's offices, hospitals
and pharmacies don't have their money from
nationalized health care?
there is not a reason in the world to believe
it would function any better as the same people
will running the show.
Report Comment
Bedazzled
, (8/19/2009 9:50:44 PM)
Everyone wants immediate gratification. It takes a while. I want my list I have for my husband completed quickly too and I am still waiting. He works at home at his pace not mine.
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