It’s just a mess, an absolute mess. There is a billion dollars of dealerships’ money on the road.
Says Duke Brubaker, general sales manager of Champion Ford-Lincoln-Mercury-Mazda in Owensboro, KY, to Automotive News [sub]. Champion has ceased clunker participation, along with 89 other dealerships surveyed in AN’s survey of 710 dealers. NADA officials allege that CARS’ rejection rates have climbed as high as 80 percent in recent weeks. NHTSA claims they have fallen in the last ten days. How’s about another $3 billion?
Just got off the blower with Rae Tyson, stalwart spokesman for the Department of Transportation’s Cash for Clunkers (a.k.a. C.A.R.S.) program. Although Tyson doesn’t have the exact stats, he revealed that the agency has rejected “significantly more” than 25 percent of dealer submissions for government reimbursement. “The bottleneck is regrettable,” Rae said. “But the number represents safeguards against fraud.” The clock is ticking. As of this morning, US car dealers have submitted paperwork to the C4C program for 390,283 vehicles. That represents $1.63 billion from the $3 billion total. Minus the $50 million processing fee. So there’s $1.34 billion and change left in the kitty. [Top ten reasons for C.A.R.S. rejection after the jump.] Meanwhile, NADA spokesman Chuck Cyrill says, “a lot of dealers are pulling out of the program.” Cyrill contends that cash flow problems caused by paperwork issues are causing dealers to “limit their exposure.” The remedy is the experience. “To address dealer concerns with a backlog of reimbursement claims, DOT has informed NADA that it will commit to deploy an additional 1,000 employees to speed up its processing efforts.”
I’m having a little trouble seeing GM’s decision to reopen 30 to 50 terminated dealerships as anything other than the result of disorganized dithering. For one thing, the fact that it’s such a vague number shows that the reanimation dealer plan—such as it is—is a work in progress. Automotive News [sub] turns to GM’s Marketing Maven to explain the mechanics and rational behind the reversal: “Terminated dealers will get the right to make the first proposals, GM says. Mark LaNeve, GM’s vice president of U.S. sales, said the open points were created when poor-performing dealerships in good locations were targeted. Other points will be filled if GM discovers that customers are driving too far to reach a dealership, he said.” Needless to say, this is bound to piss-off some of GM’s 1350 or so officially terminated—rather than GMAC-squeezed-to-death—dealers. To which LaNeve “repeated his assertion that the terminations were fair and based on poor performance for sales, customer satisfaction and other targets.” Formula please? Hello? At least one ex-GM dealer’s not bothered . . .
The Cash for Clunkers (a.k.a. C.A.R.S.) program is a car industry bailout dressed-up as a green initiative. The University of California has put some numbers to the boondoggle. According to a study by UC Davis transportation economist Christopher Knittel, Uncle Sam’s taxpayer reach-around is paying 10 times the “sticker price” to reduce emissions of the greenhouse gas carbon dioxide. At least. “While carbon credits are projected to sell in the U.S. for about $28 per ton (today’s price in Europe was $20), even the best-case calculation of the cost of the clunkers rebate is $237 per ton. When burned, a gallon of gasoline creates roughly 20 pounds of carbon dioxide. I combined that known value with an average rebate of $4,200 and a range of assumptions about the fuel economy of the new vehicles purchased and how long the clunkers would have been on the road if not for the program,” Knittel said. “I even assumed drivers didn’t change their habits, although some analysts have suggested that the owners of new vehicles will drive more than they would have with their old cars.”
The latest stats from the Department of Transportation reveal that Toyota has replaced General Motors at the top of the cash for clunkers (a.k.a. C.A.R.S.) program. The Detroit News reports that “Toyota has sold 18.9 percent of vehicles purchased through the clunkers program, surpassing GM, which has sold 17.6 percent . . . Detroit’s three automakers sold 42.1 percent of all clunker replacements, which is down from an initial 47 percent of sales — and slightly below the automakers’ 44 percent U.S. market share.” GM responded to the news by saying that while it appreciated the taxpayer’s help in driving demand, it was focusing all its energies on long term, sustainable growth. Just kidding. Spokesman Greg Martin told the DetN that “The sales will be a lot like the weather in Michigan in the springtime: It will change at any given time.” [Note to Greg: check your calendar.] ToMoCo was down with that . . .
TTAC Commentator JG sent us this link, and the following thought for the day:
I was thinking that the government should really be censoring these videos. If they can stand the test of time, in 50 years people will watch the videos and it will seem remarkable how utterly stupid some people are at this time. You probably don’t have time to watch this, but my favorite lines are @ 2:10: “Whatever dumbass traded this in probably bought a piece of shit that’s far worse than this thing . . . some Kia or some crap . . . such a waste.”
Until now, owning an Oldsmobile dealership was kind of like Ford’s logo-and-all, pre-meltdown mortgage: at the time it seemed bad, but history proved that the alternative was worse. After all, the Olds wind-down paid dealers up to $4 million to go away. Only now, several Oldsmobile dealers are getting a little taste of what GM’s less fortunate, bankruptcy-culled dealers have been put through. The Detroit News reports that “a handful” of Olds dealers are still owed annuity payments from the brandicide, and GM is filing those claims as “unsecured” debts of old, bad GM. Nobody likes being shorted in the neighborhood of $20K, but at least Olds dealers got something, right? Shouldn’t they count themselves lucky to be free of GM with any compensation at all? Not according to their lawyer . . .
This e-mail just came over the e-transom from one of TTAC’s Best and Brightest:
This just in. Some dealers are getting their first CARS [a.k.a. Cash for Clunker] reimbursement checks from the government. And they’re short. The checks. Not the bureaucrats. See, if the dealer who submitted a request OWES ANY FEDERAL BACK TAXES, THAT IS DEDUCTED FROM THE DEALER REIMBURSEMENT AMOUNT. Yep. If BillyBob Motors owes the government fifteen-hundred, the dealer gets a check from Obama Money Bags for, um, carry the five, three thousand. If BillyBob owes more than forty-five hundred in federal taxes, he gets back . . . nada.
UPDATE: DOT Spokesman Ray Tyson says the IRS “may” withhold money from Cash for Clunkers dealers’ payments should the dealer owe the federal government back taxes. I’ve heard from a dealer to whom this has happened. I have amended the text of the e-mail above and removed the “Wild Ass Rumor” designation.
At some point, maybe even soon, gm.ebay.com will be up and running. For some reason, the GM – eBay program—highly touted by CEO Fritz Henderson on the day of GM’s re-emergence from bankruptcy—only runs from August 11 (tomorrow) through September 8. So we should expect to see the main site go live at what, midnight? Thankfully, at least in some sense of that word, chevrolet.ebay.com (and the Buick, GMC and Pontiac-related url) is go. Ish. “Our Best Cars. Your Best Offer” doesn’t sound right to me. Shouldn’t that be OUR best offer? And what’s with Pontiac inclusion in the boondoggle? Anyway, what will we see when the curtain goes up?
The taxpayer-funded Cash for Clunkers (a.k.a. C.A.R.S.) “free money” program has had its fifteen minutes of fame. When the taxpayer-funded giveaway ran out of money, the MSM went mental. Here, at least, is a stimulus program (a.k.a. bailout) that works! Now that Congress has re-upped to the tune of two billion, you can expect the story to retreat into the figurative shadows, leaving the bankruptcy-dumped domestic dealers’ media meme at least two media cycles behind. Ah, but the axed dealers are rich and reliant. They haven’t given their legislative fight to restore their franchises. Thankfully (for them), New Chrysler is giving the story a new hook: awarding new franchises in the exact same territories where they killed dealers. In other words, they “stole” the stores for their cronies. We’re talking140 “open points.”
The autoblogosphere is abuzz with debate over the Department of Transportation’s (DOT) list of the top ten Cash for Clunking vehicles. To say the least. Edmunds [via CNN] reports that the DOT counted vehicles EPA-style, tallying differing powertrain or drive wheel combinations separately. For example, the DOT rates a Ford Escape with two wheel-drive as a distinct model from a Ford Escape with all wheel-drive. If you’re Edmunds (or any one else with an ounce of common sense), you combine all the model variants’ sales totals into one stat. And if you do that, you get a horse of a different color. The implication making the rounds: the DOT manipulated the data to hide the fact that a brace of SUVs and pickup trucks made the top ten; the Cash for Clunkers program is supposed to be about saving the environment. Yes, well, high margin pickup trucks offer the best chance of saving the domestics. So, let’s compare the DOT list (as of August 7) with Edumunds’ take . . .
Never one to miss a chance to put a left/right slant on, well, anything, today’s New York Times contains an editorial claiming that the Cash for Clunkers (a.k.a. C.A.R.S.) program is a triumph of the Obama administration over Republican naysayers/hypocrites/rat bastards. Blogger Timothy Egan begins by suggesting that C4C is a Republican-style economic stimulus thingie, then excoriates the elephant party for not loving it long time. “They hate it, many of these Republicans, because it’s a huge hit. It’s working as planned, and this cannot stand. America must fail in order for President Obama to fail. Don’t be surprised if the tea party goons now being dispatched to shout down town hall forums on health care start showing up at your car dealers, megaphones in hand.” Incendiary much? I’ll have mine with a side order of sarcasm, please. “But try to give struggling families a one-time boost to buy a more fuel-efficient car, with an amount that wouldn’t pay for paper clips at A.I.G., and it’s . . . outrageous!”
Car dealers know a good environmental policy gimmick when they see one. Some 60 dealers (so far) have banded together to launch a new official-looking program that offers consumers between $500 and $4,500 of “incentives” for their used or . . . wait for it . . . new car. Welcome to autostimulusplan.com world! Automotive News [sub] tries (and fails) to adopt a suitably cynical tone for the story. “The dealer program is less restrictive than the government’s. For example, it allows shorter leases than the 60-month minimum required by the clunkers plan, and there’s no limit on the price of the new vehicle; the government program sets a $45,000 cap. A qualifying trade-in must be a 2006 model or older and must have been owned by and registered to the same person for six months. The dealer program requires a buyer to purchase a replacement vehicle with 2 mpg better fuel economy.” Or, you know, maybe not (nudge nudge, wink wink). You want fine print? They got fine print!
Here’s one new car shoppers won’t be reading on the home page at Kelley Blue Book. Via press release, the car guide’s boffins wonder what will happen when the federal government stops handing out free money to clunker-driving new car buyers. Unless the Cash for Clunker scheme is extended indefinitely (a possibility) and/or widened to include other types of vehicles (less possible but not improbable), the bubble she gonna burst. And then, bad things. Euphoria, meet reality.
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