Wednesday, 19 August 2009 11:32
AIADA and international nameplate dealers received some good news this week. The Cash for Clunkers program, or Car Allowance Rebate System (CARS), has brought shoppers to our dealerships in droves. According to government numbers released last Friday, Toyota has sold more CARS vehicles than any other manufacturer, with 18.9 percent of 358,851 transactions. All together, international nameplate makes account for eight of the top ten vehicles purchased through the program. Here they are:
Best of all, more than half of these are built right here in the United States! That means more jobs, more taxes, and a real stimulus for our economy.
If you told me six months ago that I would have a problem with that kind of news, I would have called you crazy. But the tremendous buildup of dealer Cash for Clunker receivables has become a serious concern. Like thousands of other dealers, I'm wondering how long it will take for us to be reimbursed and how long this program is going to last.
Congress funded the CARS program with $3 billion. That sounds like a lot, but it's going fast. According to last Friday's report, more than half of the money has already been spent. There's a reason why manufacturers, who have been running incentive programs for decades, always choose an end date for their offers. There is no way to predict how many cars will be sold under any program, so making an offer available until "the money runs out" is a tricky proposition.
The government has funded the program with $3 billion and $3 billion only. Based on our knowledge, there will be no run over. I'm concerned that if the timing is misjudged, dealers could be left holding the bag. One mega-dealer I've spoken is out of pocket for nearly two million dollars. He's only been reimbursed for 4 of 447 deals. Another dealer has submitted 80 transactions and been paid out on zero. Even though NHTSA announced Monday it will triple its staff working on CARS, those numbers are scary. Dealers need assurance from the government that the money is coming, and that we will be told well before the program reaches its $3 billion limit.
We have extended ourselves farther than is comfortable. Dealers need to know that the National Highway Traffic and Safety Administration (NHTSA) has a plan in place to reimburse us, and to alert us when we must stop making deals. WE NEED A DEFINITIVE END DATE.
NHTSA has done an incredible job getting this massive and complicated program off the ground in just one month. But now they need to focus on communicating with us dealers. Cash for clunkers has been an unmatched success, so far. If NHTSA can be transparent with dealers through the program's eventual termination, it will surely go down in history as one of this country's most successful stimulus programs EVER.
Until then, let's keep the lines of communication open, and the cars moving.
Russ Darrow
AIADA Chairman
Our Publications: 
