Cash Stuck in Clunkers Traffic Jam - Page 3 of 3

Cash Stuck in Clunkers Traffic Jam

Administrative Nightmare

Though Stelly thinks the CARS program has been “awesome,” he describes its paperwork as “horrendous.” Dealers had to scan documents to submit. In his store, Dale Early says his sales managers compiled the information, then office personnel did the actual submission of the claims over the Internet. From the beginning, the CARS computer system was crashing. Submissions were not going through. The CARS Website was not able to handle the volume. Just to submit one claim took half an hour. If the claim was submitted and rejected, dealers had to make corrections and submit all over again. “So who knows at the end of the day how much time you are actually burning trying to get one claim accepted,” Early says.

Clunker paperwork has heavily burdened minority dealers, says Perry Watson, increasing the workload of stores’ administrative staff. “You’ve got to keep submitting the deals, and sometimes it’s rejected and it doesn’t give you a reason it’s rejected. There was nothing wrong with the paperwork, but the system is overloaded, so it kicks it back and you’ve got to re-submit it. For dealers’ administrative staff, it’s been a nightmare,” says Watson.

To guarantee gas guzzlers really are taken off the road, CARS requires dealers to ruin clunkers’ engines by putting a silicone compound into them. If a claims application is ultimately rejected, the dealer will lose the money he discounted from the new-car sale. Yet many applications haven’t been approved.

“At this point, you are really selling in the blind. You have the potential liability if the program overruns its $3 billion budget that you’re left holding the bag,” Watson says. “There are some dealers who are not disabling the engines because once you do that, and you don’t get paid, you’ve destroyed the customer’s trade-in. Dealers are waiting, and you’ve got all these clunkers out back waiting to be approved.”

The Aftermath

Gregory Jackson is hoping CARS boost in summer sales has no negative consequences on late-year sales. He admits some fall sales may have been pulled forward because people wanted to take advantage of the clunker money, but is counting on the economy continuing to get better and auto sales improving over the next few months. Jackson does not believe the CARS program will spoil buyers to expect rebates.

Dale Early, however, wants a stimulus that can keep demand high. “When you get that many people excited about doing business, and then all of a sudden there is not a program available to them anymore, what they do is what they did before: They sit on their hands. We don’t want to get on this rollercoaster ride, similar to what we have with the manufacturers when they come out with a huge incentive program: sales spike, and then when the incentive goes off, sales go way down. There are still plenty of buyers out there in the market place that we haven’t tapped into, we just need to figure out a program that allows for them to come in and for it to be a program that has some type of sustainability,” Early says.