General Motors has announced that it will lend dealers cash to cover their government clunker rebates for 30 days while the NHTSA figures out how to wind down the program. “We want to do all we can to provide customers with timely new vehicle deliveries and dealers the liquidity they need to run their businesses,” says Mark LaNeve in a company press release. “This will continue the sales momentum of our new fuel-efficient vehicles such as the Chevrolet Cobalt, Equinox and Buick Enclave.” Or, it could mean dealers will end up owing GM instead of the government owing them.
According to GM spokesfolks paraphrased by Automotive News [sub], “GM will offer the loan for any clunker deal deemed by the dealership to qualify, whether or not the government has given formal approval. The dealer must repay the loan within 30 days or GM will take the money owed back from the dealer’s open account with the automaker” [emphasis added]. If, as the NHTSA alleges, a large number of deals aren’t ending up qualifying, GM’s dealers will be in trouble no matter what. Would you rather wait for the government to pay you, or end up on the hook to GM? What a fun choice that is.
Ford and Chrysler have not made any decision to advance clunker cash to its dealers, but Hyundai was smart and started doing it before the program even began. Which might help explain why the money went so fast. Toyota Financial now pre-approves dealers in good standing for a special clunker credit line, while American Honda Financial is allowing dealers to deduct the amount of the rebate when the dealer pays off the inventory loan on a vehicle. At this point though, waiting for the NHTSA to sort out the tiny details (you know, like how much money is actually left) might not be a bad idea.
Since when is the Enclave fuel-efficient?
GM = Government Moneybags?
Isn’t owing money to the government or gm really the same thing?
Take the cash from GM, take the cash from the government, then run off to Bermuda!
Some dealership owners must be staring at empty lots right now and struggling with the decision to order anything from the factory.
This is a perfect time to close down and retire.
No matter how you slice it we’re still paying for it all.
I’d also say to hell with it and retire.
This actually may be a smart move by GM to keep their dealers in the game. And why shouldn’t they, they have Uncle Sugar’s teats pointed at them from two directions on this one.
From our stand point however…it looks like we are paying the dealers until we can get around to paying the dealers. Great.
I always try to keep in mind that the cost of any Gov program is the amount of the program ($3B in this case) plus what it cost them to administer it.
I remember seeing some years ago that only 0.19 of every dollar in the welfare system went to end recipients. Argh, and triple aaaaaaaaargh!
Think of that comforting thought as we watch them in this drunken spending orgy.
Love & taxes,
Bunter
In other news, financial/investment guru Warren Buffet has declared that one point nine TRILLION dollars of new federal deficits for 2009 alone are liable to cripple the United States and be as bad – or worse – than not having the bailouts at all. At least that’s how I read it.
Remember, folks; it took from 1776 to 1980 to put this country one trillion in debt. Now the figure is going up nearly twice that in ONE YEAR.
Anyone else thinking what I and Warren Buffet are thinking?
Like “unsustainable”?
and “bankrupt nation”?
So go ahead and get your bail-out money, folks. May as well. You may as well have fun while the monopoly money lasts!
Because soon enough, it’ll be time to pay back all of these debts. Right now, the federal debt amounts to about $38,000 PER PERSON.
Mere pocket change, right?
That doesn’t even begin to count the debt owed by Americans to banks and others.
What is the vig that GM is charging the dealers for this favor?
The Monopoly Man’s name is Mister Pennybags, not Moneybags.
Isn’t owing money to the government or gm really the same thing?
GM is covering government bailout money with government bailout money.
John
Actually, the Monopoly man’s name is “Rich Uncle Pennybags”.
The budgeted amount for C4C was what, $3 billion? How much was the bailout to Wall Street? IIRC it is now somewhere north of $1 trillion. C4C is a drop in the bucket, and is probably going to end up somewhat mitigating the highs and lows of the economic cycle for a return to what passes for normal.
If the federal government ends up on the hook for another $200 or so million, it’s to be expected from a government program that initially had amorphous guidelines at best.