Killing The Clunker

It's so 'successful' that it's now dying:

The National Automobile Dealers Association is urging the federal government to shut down the Cash for Clunkers program immediately. Already, 13% of dealers nationwide have dropped out of the program.

Car Dealers Reviews reported, via Free Republic:

The National Automobile Dealers Association is urging the federal government to begin shutting down the Cash for Clunkers program immediately.

In a statement released Wednesday evening, NADA said that, given the rapid pace at which deals are being done, it will be difficult to say when the program’s funds may run out.

But Transportation Secretary Ray LaHood said earlier Wednesday that all dealers would be reimbursed.

However, the NADA said, in its statement, that the group had “confirmed elsewhere” that dealers would not get paid if cash ran out.

Although, according to press reports, Secretary LaHood stated today that “there will be no car dealer that won’t be reimbursed,” NADA believes that this is based on DOT’s view that sufficient funds remain available. It is important to note that NHTSA has confirmed elsewhere that if the program’s money runs out before a dealer is reimbursed, that dealer will not be paid.

You know, this really begs the question of whether or not this was some kind of discreet attempt to prop up Obamamotors with even more taxpayer money while simultaneously hurting competing dealerships. just look at how much money hasn't been paid out to dealers. This is a major, major hit to the bottom line of these dealers. Take a look at some local examples:

[Larry LeFever's] Northtowne Automotive Group’s six dealerships have sold 220 vehicles under the federal program...[but] the government is pitching a goose egg. “We have not been paid for one of them,” said LeFever, president of Northtowne Automotive. “We have no clue as to why. Our exposure right now is about $1 million.”

While Northtowne’s experience may extreme, most area dealers reached Wednesday reported that they had been reimbursed on no more than 25 percent of their clunker deals.

Randy Reed’s Buick-Pontiac-GMC and Nissan dealerships [have] not been reimbursed yet for about 40 deals.

Tom Sight, owner of Bob Sight Ford and Bob Sight Kia...said he had been reimbursed on 15 percent of his deals at Kia and 25 percent at the Ford store.

Morse Chevrolet in Overland Park had not received a reimbursement for any of its clunker deals through last week.

If the federal government comes through on all these deals, the dealerships will come out okay. At this point, it sounds like most of them are generally positive about the program...other than the fact that they're not getting paid.

Sounds like a typical government program to me, where the notion of profit and staying in the black is completely irrelevant. Still, it will be very informative to see how this plays out, especially as the program is officially ending on Monday.

Regardless, I thought this was very interesting, too:

In a survey nearly 800 dealers,

97% of dealers who responded, say the government is not reimbursing fast enough
13% of dealers have dropped out the program because the government is not reimbursing fast enough and overall concern payment problems
87% percent of dealers are concerned the money will be exhausted
3% of CARS program deals have been reimbursed
66% of dealers have not received one payment from the government
25% of dealers are experiencing servere cash flow problems that require short-term loans to fix
11% of submitted applications have been approved (though dealers still are waiting for the money)
16% of submitted applications have been rejected
55% of dealers are not confident they will get reimbursed for every deal
40% do not want the program to continue, even if changes are made to the CARS program

The bottom line is that the federal government threw $3 billion of taxpayer money at this program and has botched just about every part of it, from the implementation to the reimbursement to the estimations of just how much utilization it would see.

In short, this was the perfect dry run for Obamacare. Of course, keep in mind this was $3 billion, and only for a few hundred thousand Americans looking for a new car; Obamacare is multiple trillions of dollars, and will be for literally every man, woman, and child in the nation. Have they really proven they're up to the task?

There's my two cents.