Just kidding. No zombie watch for the Cash for Clunkers (a.k.a. C.A.R.S.) program, even though it’s already burned through one life and two dealer deadlines. Automotive News [AN, sub] reports that Uncle Sam’s extended the dealer deadline again, thanks to ongoing computer problems. Transportation spokeswoman Jill Zuckman “didn’t specify a particular time for the deadline, and said it depended on how long it would take the government to get the clunkers Web site up so that dealers could file claims.” While the boffins sort that out, more “issues” are arising. As of early Monday morning, dealers submitted 635,186 claims worth $2.65 billion in rebates. Although AN says the number puts the payout “close” to the $3 billion limit, C.A.R.S. may already be over budget. Add up the administrative costs and the rebate requests “stuck” in the system, and the question arises: what happens to those deals that may arrive once in a lifetime, after the money’s gone? Meanwhile, a group of dealers is keeping its “shadow” Cash for Clunkers plan going . . .
We’ve already highlighted some of the scammers who misled dealers and customers into believing that they were “official” (i.e., governmental) Cash for Clunkers representatives. It turns out the same guy who got his hands rapped by the feds for adopting a federal mien found the motherlode with autostimulusplan.com—Level 5 marketing‘s Sean Wolfington has convinced some major dealer groups to dress up their normal trade-in come-ons as part of Cash for Clunkers. I mean, the “2009 Automotive Stimulus Plan.”
Automotive News is happy to promote report on the private program without reservations, and the site goes out of its way to say it’s not associated with the government program. But it’s clear that it’s the same old dealer policies with a new name. Wolfington’s plan covers both new and used cars, with few to none of those pesky caveats that restricted C4C.
The dealer program has fewer restrictions than the government plan. For example, it allows shorter leases than the 60-month minimum required by the clunkers plan. There is no limit on the price of a new vehicle; the government program set a $45,000 cap.
The dealers require that the vehicle being traded:
• Is older than the 2006 model year.
• Is in working condition.
• Has been owned and registered for at least six months.
There are no minimum miles-per-gallon requirements. The replacement vehicle must have a minimum improvement of 2 mpg.
And if not, “the dealers say their plan may vary in some states because of laws governing automotive advertising and promotions.” Or any other reason, really, as it’s not a government program. And there’s no “fraud squad” monitoring its implementation.
Mr. Wolfington claims 73 dealers have signed-up for his auto stimulus plan, including Rick Case Automotive Group’s sixteen dealerships in Ohio, Georgia and Florida. Be that as it may, the success of Wolfington’s program highlights the fact that C4C provided a shot in the arm for all car sales; which August’s sales numbers will prove. But the pull-forward, and resulting crash, may be equally epic.
A. They’ll end up paying all claims for (qualifying) sales made by the deadline. They actually had a stimulas package work in a timely manner, they aren’t going to let a few hundred million ruin it.
B. They’ll find a way to disqualify enough sales to make the $3 billion limit dead on. They seem to be taking that part seriously, imagine that quite a few dealers thought they would just let anything go and are finding out the hard way that they aren’t.
I wonder how many dealers are destroying the engines before getting paid by the government, then have the car be disqualified on a technicality. Then a car that may be worth $2,500 running is worth $500 with a bad engine.
What of people who signed contingency contracts with dealers, took home their new cars, the dealers destroy the engine, and then the government disqualifies the trade. Is the contingency void because the trade has been devalued by the destruction of the engine?
npb – Thats a good question (the second one) and imagine that it will be decided by many lawsuits. The CARS will be for lawyers too.
And these are the people that some folks want to take over the health care system?
@Rod Panhard:
Can you point to any current bill in Congress that proposes a government takeover (let alone a DOT takeover) of the health care system?
Or, are you suggesting that there are people out there proposing that autostimulusplan.com take over the health care system?
I don’t think it’s fair to say that sales were pulled forward without entertaining the idea that sales were actually pushed back.
I’m sure many people first heard of this program a few months or more before it began and just waited patiently for the green flag to drop. So sales that would have happened in May, June or early July got delayed until late July and August.
In my opinion, based on a very informal and not statistical in any way, survey I did of my fellow GM workers, sales have been subdued or pushed back while everyone waits to see if they are going to be laid off.
And I don’t know about pulled ahead either… some times I wonder if the price of a new vehicle is just too much. What would the SAAR be if all cars/ trucks were priced $3K-5K less to match the stagnation in real wages in the last eight years?
No cars are being destroyed by dealers until the reimbursements come through. No dealer would be stupid enough to be left holding a worthless car based on pending government payment. C4C law allowed dealers to store the cars until payment was finalized without being destroyed.
Keith Griffin
UsedCars.About.Com