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N.Y. Dealers Consider Pulling Out of ‘Cash for Clunkers’

August 20, 2009

NEW YORK — Many New York franchised, new-car dealers are in talks to end the ‘Cash for Clunkers’ program over concerns the federal government is not approving transactions and reimbursing dealers in a timely manner, according to the Greater New York Automobile Dealers Association (GNYADA), an organization which represents 450 franchised new car dealerships in metro New York.

“In many cases, dealers have shelled out hundreds of thousands of dollars in rebates to consumers since the program began six weeks ago,” said GNYADA president Mark Schienberg. “And only a very small percentage of that money has been paid back to the dealers, leaving these small business owners too cash strapped to continue offering consumers the discounts. Even in the best of times, carrying this much debt would cause problems, but in today’s credit-strained economy, it’s simply too much for the dealers to handle.”

Recent estimates show that only 2 percent of rebates have been paid back to dealers, according to the GNYADA. However, lack of reimbursement for paid-out rebates is not the only problem for dealers:

  • Many dealers complain that valid deals are being rejected by the government for small mistakes and typos with little or no guidance on how to correct the paperwork problem.
  • Dealers can’t get a “yes” or “no” answer about qualification in a timely manner from program administrators.
  • The government’s system has rampant computer glitches, which prevents dealers from applying for rebates.
  • Customer service phone lines often take several hours to get through.

Additionally, dealers do not know when the $3 billion allocation will run out but are expected to pass on the rebates to consumers which they may not get paid back for.  GNYADA is calling on the federal government to initiate a real-time notification system which would alert dealers when the program is out of money.

“Despite its problems, the Cash for Clunkers program is a tremendous incentive to encourage people to trade-in their old vehicles for newer, safer, more fuel efficient and less polluting cars and trucks,” said Schienberg.  “We recognize that the program has been more successful than once anticipated, but if these issues are not straightened out quickly, the program is going to fail under its own weight.”

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