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The Honolulu Advertiser
Posted on: Saturday, August 15, 2009

Dealers have yet to see cash for their clunkers


By Stephen Manning
Associated Press

WASHINGTON — Auto dealers say they still haven't been repaid for the majority of Cash for Clunkers deals they have made, creating cash crunches for many as they wait for the government to reimburse them under the popular $3 billion vehicle trade-in program.

Some dealers report they have hundreds of thousands of dollars worth of rebates they have submitted to the federal government for repayment that are still outstanding, including deals that were made in the first days of the program nearly three weeks ago.

As of Tuesday, Hawai'i car dealers hadn't received any payment for the clunkers they had taken in, said Dave Rolf, executive director for Hawai'i Automobile Dealers Association.

Rolf was quick to add that dealers are "very happy" with the program and expect the payment delays to be solved soon.

"It's a very successful program bogged down by its own success," Rolf said.

Duane Paddock, who owns a Chevrolet dealership near Buffalo, N.Y., said dealers may stop accepting clunkers under the program because of the funding lags.

"I've got dealers who are reporting to me that they've got over $3 million that they've fronted and they haven't been paid anything. It's just killing dealer cash flow right now," said Paddock, who serves as co-chair of GM's northeast region dealer council.

The National Highway Traffic Safety Administration, the federal agency overseeing the program also known as NHTSA, said yesterday that dealers have submitted requests for rebates that total $1.5 billion — half of the money allocated to the program — through the online system set up to process and pay the claims. But NHTSA did not provide a dollar figure for the total amount that has actually been paid since the program began July 27.

There are indications that not much of that money has actually flowed to dealers. A survey of about one-fifth of Virginia's 519 dealerships done this week by the Virginia Automobile Dealers Association found that only 2.8 percent of the roughly 4,000 Cash for Clunkers deals submitted to the government have been paid.

The program also has been plagued by heavy demand that has overwhelmed the computer system and review process NHTSA set up. The agency has since hired more staff to process claims and has increased the capacity of the computer network.

Under Cash for Clunkers, car buyers are eligible for discounts of $3,500 or $4,500 depending on the fuel economy of the vehicles they trade in and buy. Dealers take the amount of the rebate off the sale price, then submit paperwork to the government proving the sale and that the trade-in will be scrapped.

Data released yesterday shows the Toyota Corolla is the best-selling vehicle under the program.