Auto dealers are bracing for a possible rush of last-minute shoppers before the Cash for Clunkers program ends Monday, but some buyers may find they won’t be able to cash in on big government rebates.
Dealers are increasing staff for the last weekend of the $3 billion program. But many say they will stop Cash for Clunkers sales after Saturday to make sure they get reimbursed by the government for the rebates of up to $4,500. Some reported traffic at showrooms began to swell Friday after the government announced the end date.
The weekend will be the last big push for the program that has helped revive sagging auto sales by allowing drivers to trade in older, less fuel efficient vehicles for new cars and trucks. Originally expected to last for several months, the program is on track to exhaust its funds in just over four weeks. It’s been a big hit with buyers, but has led to hassles for dealers who have been paid for only a fraction of the rebates they’ve extended to customers.
“It will be somewhat good to get it done,” said Skip Davenport, whose South Carolina Ford dealership hasn’t been reimbursed for any of the $150,000 worth of rebates it has given to customers. The dealership will stop sales Saturday. “We are all just stretched.”
The Department of Transportation Thursday that it will end Cash for Clunkers at 8 p.m. EDT Monday in order to avoid going over the billions set aside for the program.
Dealers say they may be in the difficult position of having to turn away new sales despite what is expected to be heavy weekend.
“I think we are going to have a lot of interest in the showroom, but we are going to be in the uncomfortable position of giving some people disappointing news,” said David McGreevy, sales manager for AutoServ, a New Hampshire dealer chain.
All paperwork on pending sales must be submitted to the government by the Monday deadline, meaning dealers will be hesitant to make new Cash for Clunkers sales when they are still trying to get approval for sales made weeks ago, said Peter Kitzmiller, president of the Maryland Automobile Dealers Association.
The Obama administration has declared Cash for Clunkers a success, saying it has reinvigorated the nation’s listless auto industry and taken polluting vehicles off the road.
Much of the data on sales seems to support that, with 489,269 vehicles sold through Friday morning.
Smaller, more fuel efficient vehicles like the Toyota Corolla and Ford Focus are top sellers, while buyers are trading in SUVs like the Ford Explorer to be scrapped. The program has been so popular that Congress refreshed it with an additional $2 billion when the original $1 billion ran dry in early August.
But many dealers are nervous they won’t be repaid. As of Thursday, only about 7 percent of rebates had been repaid.
There’s fear that the government’s Web system for processing dealer paperwork will be overwhelmed. That happened when the program looked likely to end earlier this month.
“The focus is going to be getting the deals that were already started into the system,” Kitzmiller said.
Dealers reported problems accessing the system Friday afternoon, though a spokesman for the National Highway Traffic Safety Administration, which is running the program, said there was heavy volume but no major problems.
Citing the reports, the National Automobile Dealers Association called for an extension of the filing deadline to Aug. 31, while keeping the Monday cut off for sales. The group said that would provide enough time for dealers to enter their sales. But the Department of Transportation said there were no plans to extend the deadline.
For car buyers, the message from dealers is clear — come prepared.
- Many dealers say they won’t make deals this weekend without all the proper documents for the car they are trading in. That means the title, proof of registration and proof of insurance. Dealers need those to file their 13-page application for reimbursement.
- Problems could arise if there is a lien against a vehicle. There may be little time to retrieve that title from the lien holder by Monday.
- Some dealers won’t make new deals on Monday, saying they plan to spend that day trying to get their current deals in before the deadline. So Saturday could be the last day of the program at some showrooms.
That provides some relief for anxious dealers like Ford’s Davenport.
“We can get back to business as usual.”