Dealers Took the Clunkers, Now Want Cash

(CBS)  Don Mushin is the boss at a Los Angeles Toyota dealership. But these days he has a new title on his door: "Colonel Clunker."

"We normally sell 300 cars a month," Mushin told CBS News correspondent Ben Tracy. "We're on track this month to do about 600."

Thanks to Cash for Clunkers, what could have been a dismal summer for car sales now has a Hollywood ending. Nationwide more than 457,000 clunkers have been traded in for more fuel efficient models and a total of $1.9 billion in rebates.

But now the wildly program that provided up to $4,500 per clunker is being scrapped.

Yet there have been problems. Dealers have to front the money for the rebates - sometimes to the tune of hundreds of thousands of dollars - and the government has been slow to pay them back.

"Slow I don't think is the word," Mushin says.

The dealership made 183 clunker deals but has been reimbursed for just one. The government owes them $800,000. So Mushin and many other dealers are pulling out of the program early for fear of not getting paid.

In fact, with $1.9 billion in rebates dealers have paid out, the government has reimbursed them just $145 million.

"They're going to get their money, we have the money, Congress provided the money, they're going to get their money," said Transportation Secretary Ray LaHood.

Major auto manufacturers want to keep sales going so they are now loaning dealers money for the rebates. Mushin says he's already done his part on the clunkers.

"Thank you to the government," he says, "if I get paid."

Now he wants his cash.

[JayAdler1]

I have offered my reservations on the Clunker Program in past commentary and validated my reasons for my skepticism point by point. Now, with the program at its conclusion, here is something more to think about. Out of the top ten vehicles actually purchased under the plan and driven away with the exception of maybe two, all were Asian and Japanese. I have in my lifetime owned five Toyota Corollas, never needed a part, a repair, great mileage and able to run beautifully for 200,000 miles. No American dealer will ever have any chance to make service money on any of these cars which are foreign made. The cardinal rule in sales and I was a Sales Rep for 20 years, is never for any reason do you send your customer into your competitor's tent. That is exactly what the Clunker Program did besides stalling the money it steered people away from GM and Ford for the next ten years.

[Ace22257]

Maybe they could convince some of the bailed out banks to cough up the money to help cover this.....catch them before they give it all away as bonuses.......

[JayAdlerMusic]

Some of the points I made in previous commentary were supported not so much as my experience as a freelance writer but as a former Fleet Sales Manager for a major rent a car corporation several years ago. Besides what all of us already know about the Federal Government as business man, as someone with car sales experience, I knew that the only way to definitively sell a vehicle is to do it and get it over with in the dealership especially never leaving a dangling amount without a due date. On the news today were car dealers laying out $500,000 and being reimbursed $3,500. You must understand that car dealerships engage in leveraging or borrowing to attain the best result versus paying outright; it's the nature of the business. I have previously brought up the fact that the paperwork is of course difficult and prone to errors which also have created delays. These dealers will have no compunction about repossessing these vehicles acquired or dunning the customers and that is not far off. A chicken in every pot.

[RobynRoberts100]

I think I said this before, but I really think that this program will continue in another form. I think Obama's team is smart, and will revise it to be better. Not perfect, but better. At least they're trying SOMETHING.
I've gathered a list of pros and cons for the Individual (4-Pro, 6-Con), and a list of Pros and Cons for the Collective Soul (6-Pro, 12-Con).

http://www.AutoStimulusPlan.Org

[gramto8]

To all who say the program has not worked, it is not shutting down because it didn't work. It is shutting down because it worked far too well. The dealers are complaining about not getting their money when it has only been less than one month since the program actually started. Some dealers have been paid for the earlier cash-ins. The later ones are going to have to wait their turns. Durn, even in Burger King, you have to wait in line.

[specialty8]

So we can expect to wait in line to get health care also?

[specialty8]

Burger King would be a great place to wait while in the middle of a heart attack. Have a whopper and fries while waiting.

[jhenry2108]

The program requires the scrapping of your eligible trade-in vehicle, and that the dealer disclose to you an estimate of the scrap value of your trade-in. The scrap value, however minimal, will be in addition to the rebate, and not in place of the rebate.

Jhenry
Blogger
www.cashforclunkersfacts.info
http://www.cashforclunkersfacts.info

[naj1953]

Another program that only worked for a few...Car dealers another bunch of crooks they helped...That weren't hurting...Just another bunch of greedy people....

[rational_1]

Typical! This is just the Feds warming up for their planned increased role in healthcare. Your grandma will be a clunker in a few years, and the Feds will be just as quick to pay for her. LOL.

[gramto8]

The dealers are not hurting. They have much more than $4500.00 marked up in the price, plus they still have those cars sitting on their lots and can sell them if they are so dad-gummed tight for money. They don't have to disable them until they get final approval. The system has to verify that none of the dealers are pulling fast ones on them, not that any car salesmen would EVER do something like that!! If the verification process were not in place, the people on this site bellyaching about the slowness would be bellyaching about there being no verification.

[starda40]

Government slow to react with their program, standard procedure