Cash for Clunkers may be over, but its swath of confusion rolls on unabated. Keloland reports that South Dakotans are being told that their clunker rebates are taxable as income. “They didn’t realize that would be taxable. A lot of people don’t realize that. So they’re not happy and kind of surprised when they find that out,” says Minnehaha County Treasurer Pam Nelson. Omaha.com reports that clunker rebates are also liable for state income tax hits of $192.50 to $247.50 depending on the amount of the rebate. Nebraska city sales taxes also apply. Surely other states will be making announcements about local arrangements, but in the meantime, where is the confusion coming from? The cars.gov website’s FAQ holds the key. “Is the credit subject to being taxed as income to the consumers that participate in the program?” CARS asks itself. “NO,” is the answer. “The CARS Act expressly provides that the credit is not income for the consumer.” Unless it is. Have fun with that.
The Freep reports that final cash for clunker numbers show the program coming in under its $3bn budget. $2.877bn was spent on 690,114 deals, according to government data. The bad news? C4C did a mediocre job stimulating the domestic firms; according to the Detroit News. GM, Ford and Chrysler captured just 38.6 percent of all clunker sales, down considerably from their joint 45 percent market share in July. Toyota captured 19.4 percent, GM snagged 17.6 percent, while Ford only ended up with only 14.4 percent—just ahead of Honda which had 13 percent. Check out the NHTSA’s PDF postmortem press release on the program here. Though the Detroit Three didn’t do so well in the “cash” portion of cash for clunkers, it swept the clunker list. Ford alone had five of the top ten clunker trade-ins, with GM and Chrysler rounding out the list. Hit the jump for top ten buys and trade-ins by model.
“To better meet the high demand we’re experiencing, we have temporarily shut down the service so we can expand our capacity to more quickly serve your requests. Please visit the site at a later time. We apologize for any inconvenience,” is the website’s current position, according to dealers quoted in AN. Having endured the odd server meltdown here at TTAC, we sympathize. Popularity has its downsides.
There are two sides to the auto insurance business: the repair side and the insurance side, and for the industry to function the needs of both must be balanced. Massachusetts Governor Deval Patrick is accused of upsetting that balance by replacing a long-standing member of Massachusetts’ Auto Damage Appraiser Licensing Board with an executive from Progressive insurance. Patrick responds to the accusations by arguing that Karen Mills’ replacement of Joseph Valarioti (owner of Central Auto Rebuilders) actually returns balance to the board.
The Detroit News can’t seem to decide. On the one hand, they say, “the White House next month will name its top auto adviser to oversee an effort to boost the sagging manufacturing sector.” On the other hand, they quote White House spokesfolks as saying, “Ron Bloom is doing a great job on the auto task force. There are no plans to shut down or repurpose the auto task force, and we expect Ron to continue to do a great job.” So what happened to rumors that the Presidential Task Force On Autos (PTFOA) will be gone by September? The DetN is too worked up about the bright future of US “manufacturing policy” to care. And with GM and Chrysler out of bankruptcy court, one has to assume that the focus will be shifting away from the auto industry. At least until the next bailout.
The national frenzy that is Cash for Clunkers will end Monday at 8 p.m. Eastern, according to the government’s CARS website. “It’s been a thrill to be part of the best economic news story in America,” Secretary of Transportation Ray LaHood enthuses in a press release (PDF). “Now we are working toward an orderly wind down of this very popular program.” Though LaHood is able to put a happy face on the program (it’s what he gets paid to do), evidence suggests that there are still a number of headaches to work through.
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.
Would you believe that two-thirds of all car dealers are still waiting for their first clunker check? Could you imagine that only three percent of all clunker deals have been been blessed by NHTSA? Automotive News [sub] has the survey for you! The only problem is that AN admits the poll was unscientific. Plus, it was an onlinepoll. Still, the headline looks good beneath a headline in which NADA admonishes that dealers are “at risk” in making further clunker deals. And NADA’s internal surveys show that all the clunker money is already gone, reinforcing the apocalyptic tone of the AN survey.
With $1.7 billion already claimed by consumers, the NHTSA is preparing a wind-down of the CARS rebate program, reports Automotive News [sub]. Based on dealer sales and “other surveys, the NHTSA “can make a pretty good judgment call” about when to end the program, reckons Transportation Secretary Ray LaHood. “I know dealers are frustrated, but they’re going to get paid.” LaHood said the program’s high rejection rate is due to the huge demand and dealers’ “failure to fill out claims correctly.” Dealers, meanwhile, are far more likely to blame the rampant delays and rejections on the NHTSA’s “failure to have their shit together.” Either way, it sounds like just about everyone is ready to be done with Cash for Clunkers.
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?
Charities have been some of the loudest opponents of the Government CARS stimulus, voicing fears that it would cause car donations to plummet. “It varies by market, but there’s been an 11 to 12 percent drop compared with last year,” Volunteers of America VP (vehicle donations) Jim Hartman tells Reuters. “We started seeing it right away in July.” VOA and The Military Order of the Purple Heart each typically receive 40,000 to 50,000 vehicle donations a year. Purple Heart estimates its C4C losses at $105 million over 24 months. Hartman tells Reuters that a bill is pending in congress to increase vehicle donation tax credit caps to $2,500 from the current $500 limit.
Let’s not kid ourselves, the cash is the important part. And though the CARS legislation requires the DOT to refund dealers for their clunker deals within ten days, Automotive News [sub] reports that it just ain’t happening. Transportation Secretary Ray LaHood said last week that the bugs had been worked out of the CARS computer system, and the National Auto Dealers Association concurred. “There are kinks still left in the system, but they, too, are being worked out,” NADA spokesfolk said at the time. Turns out they spoke too soon.
You may recall that President Obama has appointed a “Pay Czar” to “review” the compensation packages enjoyed by executives working for companies suckling on the TARP-shaped teat. As Bloomberg reports, “Feinberg, the Obama administration’s ‘special master’ on executive pay, is due to receive compensation proposals by tomorrow from Citigroup Inc., American International Group Inc., Chrysler LLC, Chrysler Financial Corp., Bank of America, GMAC LLC and General Motors Corp. The companies must tell him how they plan to pay the 25 top-earning employees. Feinberg will rule on the plans within 60 days after they’re completed . . . In a second phase, Feinberg will decide on pay packages for the next 75 highest-paid employees at the companies.” In anticipation of the gravy train pulling into the station, Chrysler said “it will adhere to the requirements outlined in its $12 billion U.S. government bailout”—presumably as long as they don’t apply to their new Italian employees (wink wink). “GM, the recipient of $65 billion in U.S. aid, said today that it has submitted its proposals. It doesn’t plan to make the submission public.” Looks like GM CEO Fritz Henderson had his fingers crossed when he promised—under oath before the Senate—that the nationalized automaker would be transparent to taxpayers. Huh.
It’s been a while since Ford had a halo car. The GT got the sighs of admiration but was more of a monument to Ford’s past than to its present. If nothing else, the F-150 Raptor gives Ford trucks a Baja 1000-competitive glow (3rd place in Class 8, “race prepped”). Besides, it actually attracts paying customers. Like . . . the government! “Multiple sources reveal” to pickuptrucks.com that the US Border Patrol is considering the purchase of “at least 10” of the $38K base trucks. The one catch is that Border Patrol wants “work truck” interiors instead of Ford’s standard “class leading” finery. Can’t you see Howie Long rolling his eyes about that one? But hey, Ram and Silverado are both built in Mexico (among other places), so at least the Raptor is the least irony-charged full-sized border guard truck. Still, is “the immigration issue” as easily solved as a factory offroad special?
Automotive News [sub] reports that the Senate has passed a $2 billion extension to the Cash for Clunkers program, extending the deal through Labor Day. President Obama has already said he would sign the bill. But will it help the taxpayer-owned auto firms that desperately need a boost? Will sales levels continue at their current surging rates? Will fraud stories start popping up as they have in Germany? Who cares. America loves a deal.
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