Newsletter - July 2009

Cash for Clunkers Program May End Up Being a Clunker Itself

CARS Cash For Clunkers is a government program that provides a Government instant rebate of $4500 when someone trades in a vehicle that gets 18 miles or fewer per gallon for a car that gets 10 miles per gallon better mileage or a “truck” (meaning crossover SUV or bigger) that gets 5 miles or more better mileage. A $3500 rebate is available for a lesser mileage increase. To see if your clunker qualifies for the rebate go to fueleconomy.gov and click on the green box upper right that says CARS (Car Allowance Rebate System). The cars traded in must be destroyed so there is no value to the trade in above the rebate amount. The trade in needs to have been registered and insured for the past full year.

The program began in late July with a government allotment of one billion dollars which was supposed to last until November. By August 1, NADA, the dealer association, estimated that the billion was almost used up so the US House approved another $2 billion and the Senate approved it about a week later.

We traded in the old Volvo shop shuttle for a Jeep Patriot which was rated for 5mpg better fuel economy. I’ll miss the old Volvo, but the seatbelt was wearing out and a new one is no longer available. We got to the dealer mid afternoon, but it took until 10:30 to finish the paperwork.

Many dealers are complaining about the high rate of rejection by the government of the reimbursement applications they are sending in. According to an Automotive News survey, 97% of dealers are unsatisfied with the reimbursement timing, stating the government is not reimbursing quickly enough. 87% are concerned that the program will run out of money before all reimbursements are made. 13% have quit the program citing disorganization on the part of the government and excessively high reject rates. According to NADA, $172 billion worth of claims for reimbursement have been filed but only a small fraction has been paid.

Some dealer comments include: “The people processing these claims are clueless. I have had 100% rejected.” “They rejected one for missing signature. I checked it and found all the signatures were there. The lady on the “HELP” line could not tell me why it was rejected. She just said submit it again.” “CARS—Clearly A Retarded System… oh I forgot… .GOV”

The Obama Administration is now allowing customers to get clunker rebates on factory orders but the rules aren’t clear yet.

None of this may matter though. A news item posted on Automotive News at 3:47 Mountain Time Wednesday said “National Automobile Dealers Association officials today asked the government to suspend the cash-for-clunkers program because a survey by the group found that the $3 billion dollar fund has been exhausted…”

Affiliations & Awards

Addison Auto Repair & Body Shop
2005 South Holly Street • Denver, CO 80222 • 303-691-9484