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Wednesday, August 19, 2009

Hundreds of NY Auto Dealers Pull Out of Cash For Clunkers

Over all the Cash for Clunkers program makes about as much sense as breaking all the windows in the country so that you can sell new windows. You trade in a car get $4,500 toward a new car and the dealer has to destroy your old car, instead of re-selling it. This clunker of a program breaks a key rule of economics, for an economy to grow you need to create capital. The United States economy is in the crapper and our government, is destroying capital.

It gets even worse, dealers all over the country have been complaining because they are laying out the $4,500/car and the government is slow in paying it back.Today the New York Auto Dealers Association has announced that hundreds of auto dealers have pulled out of the Cash for clunker program because they can no longer afford to wait for the government to pay their obligations.

Ladies and Gentleman this is is the same federal government that wants to take over your Health Care.

NY dealers pull out of clunkers program

 Hundreds of auto dealers in the New York area have withdrawn from the government's Cash for Clunkers program, citing delays in getting reimbursed by the government, a dealership group said Wednesday.

The Greater New York Automobile Dealers Association, which represents dealerships in the New York metro area, said about half its 425 members have left the program because they cannot afford to offer more rebates. They're also worried about getting repaid.

"(The government) needs to move the system forward and they need to start paying these dealers," said Mark Schienberg, the group's president. "This is a cash-dependent business."

The program offers up to $4,500 to shoppers who trade in vehicles getting 18 mpg or less for a more fuel-efficient car or truck. Dealers pay the rebates out of pocket, then must wait to be reimbursed by the government. But administrative snags and heavy paperwork have created a backlog of unpaid claims.

Schienberg said the group's dealers have been repaid for only about 2 percent of the clunkers deals they've made so far.

Many dealers have said they are worried they won't get repaid at all, while others have waited so long to get reimbursed they don't have the cash to fund any more rebates, Schienberg said.

"The program is a great program in the sense that it's creating a lot of floor traffic that a lot of dealers haven't seen in a long time," he said.

"But it's in the hands of this enormous bureaucracy and regulatory agency," he added. "If they don't get out of their own way, this program is going to be a huge failure."

The program is administered by the Department of Transportation.Transportation Secretary Ray LaHood said Wednesday that dealers will be repaid for the clunkers deals they have completed.

"I know dealers are frustrated. They're going to get their money," LaHood told reporters. He said the Obama administration would soon announce how much longer the $3 billion car incentive program will last.

Through early Wednesday, auto dealers have made clunkers deals worth $1.81 billion, resulting in 435,102 new car sales, according to the DOT.

1 comment:

ChenZhen said...

First off...By and large, these are cars (mostly trucks, actually) that are worth less than the sum of their parts, so I don't really buy into the "destroying capital" angle.

Otherwise, the owner of the new vehicle will pay less per year in gas, the dealers will make money selling the cars, banks will make money on the loans, and the manufacturers will need to produce more cars to replace the ones sold. There are all kinds of winners there.

I dunno. After countless billions dumped into things like an Iraq war, Wall Street bailouts and other stimulus handouts, this little $3 Bil program is one thing that really seems like a neat idea.