Cash for Clunkers: Chenango auto dealers still waiting for payment
CHENANGO COUNTY – As Cash for Clunkers winds down, area dealers are still waiting to receive hundreds of thousands of dollars in payments from the federal government for vehicles they have sold as a result of the incentive program.
“It’s really put a strain on our resources,” said Trip deCordova, president of The Benedict Corporation. His GMC, Cadillac, Pontiac and Subaru dealership has more than 20 applications still in limbo, he said, which translates into more than $100,000 they have yet to collect.
The Norwich car dealer knows he’s not the only one still waiting to see any cash for the clunker deals he’s sealed.
“We’ve heard all sorts of rumors,” he said, describing reports he’s read in industry magazines of larger dealerships who were still waiting on a million dollar or more. He personally knows of one dealer who has received payment on only two of the 100 cars he sold through Cash for Clunkers, and another in Wisconsin paid for just three of the 80 they sold.
While deCordova said Cash for Clunkers has been successful in the fact that it has stirred up consumer interest in purchasing both new and used vehicles, he still calls the execution of the program an “administrative nightmare” for dealers.
“I don’t think they had any idea how this would go off,” he said.
Since the Cars Allowance Rebate System (CARS), as it is officially known, commenced car owners across the country have been taking advantage of the program, trading in their old gas guzzlers in exchange for up to $4,500 off new, more fuel efficient models. According to an Automotive News report, the U.S. Department of Transportation reported that more than 635,186 transactions totaling $2.65 billion had been processed as of 7:47 a.m. Monday.
The number of transactions has repeatedly overwhelmed the government website he and others dealers use to file applications. On Friday, deCordova said, the site was down for 4 hours and entering six deals, which should have taken less than an hour, took five. He was keeping his fingers crossed Monday morning, hoping that they wouldn’t experience similar problems with the site as dealers across the country tried to get applications in before the 8 p.m. deadline.
The site did in fact experience more problems Monday afternoon, prompting the DOT to extend the submission deadline until noon today. There was no extension, however, on Cash for Clunker sales.
Hank Scudder, general manager of Christman Motors in Norwich, wasn’t concerned about the Monday cut-off date. Why? Because the Chevrolet and Buick dealer had already put an end to Cash for Clunkers sales on Saturday.
“It was very tough on dealers,” said Scudder, who reported that Christman’s has yet to receive payment on around a dozen deals. Based on even conservative estimates, that means the dealership is waiting on between $40,000 and $50,000 in government rebates.
“Dealers don’t have the kind of working capital to float,” he said, although some car dealerships were willing to take more of a risk than others.
“We were very careful,” reported Scudder, who admitted that if they had been more confident in the way the program was administered on the federal level, they would have been more likely to jump in “with both feet.”
That said, Scudder wasn’t completely dissatisfied with the program. It certainly did help drive traffic at the dealership, he reported. And while not every potential buyer was a candidate for the Cash for Clunkers program, that didn’t stop them from converting the interested party into a vehicle sale.
According to Jim Bleyle, the program did succeed in sparking an interest among consumers and increase the number of potential car buyers visiting Chenango Sales, the dealership he co-owns south of Greene. But the mix of people it brought in, weren’t exactly what he was expecting.
“I thought there would be more local people,” said Bleyle, who reported that the Ford, Lincoln and Mercury dealership saw a flood of prospective buyers from outside the area. Many, he explained, were from more metropolitan areas where dealer inventories had already been depleted. Bleyle and his partner, Byron Miller, exercised caution however.
“We decided that if we were going to stick our neck out, we’d do it locally,” Bleyle explained.
And who can blame them, when on average 80 percent of applications were being rejected across the board. The burden of proof was on dealerships to gather and verify the necessary information and documents, he explained.
“We became policemen in this program,” he said, adding that if Cash for Clunkers is repeated, perhaps that onus should fall more on consumers.
Like Scudder, Bleyle cut off sales on Saturday. So far, none of the applications they have succeeded in filing have been denied, but it took 18 days for the first two deals they made under the program to be officially approved and another two days before they received payment.
Approximately five more applications are still pending, he said, one of which is already at that 18 day mark.
At Smith Ford, LLC in Norwich, General Manager Will Tyrrell has applications pending which have already hit the 20-day mark and has still yet to see a penny of the roughly $40,000 he expects to receive through the rebate program.
“All of our claims are legit; they should go through,” he said. Despite his confidence in the accuracy of the paperwork he has submitted on behalf of his dealership, he still has concerns, particularly over what will happen if some deficiency is found in one of those applications after the submission deadline.
“It does make you worried,” Tyrrell said, as at this point, if one of those applications is rejected and can’t be resubmitted it is the dealership, not the car buyer, that will have to “eat” the loss. “That’s taking a pretty big gamble.”
Adding to his concern is the fact that many of the cars sold through the program were smaller cars and trucks, where the dealership makes only a small margin. If any of the rebate claims sour, it could wipe out the profit on several vehicle sales.
Smith Ford LLC cut off sales through the Cash for Clunkers program early last week, several days before the Transportation Department announced it would halt CARS well in advance of the original Nov. 1 deadline.
“We wanted to make sure we were going to be reimbursed,” he said, explaining that decision.
Even after they pulled their own plug on clunkers deals, Tyrrell said they continued to receive calls about the program. That hasn’t made him regret the decision to end participation early, as the dealership has still been successful in converting that interest into sales at both Smith Ford and their sister lot, The Giant’s Warehouse.
“We’ve still been able to sell cars without it,” he said.
While the intentions of Cash for Clunkers is good, Tyrrell has some suggestions for the federal government if they ever decide to offer a similar deal. One option would be to allow car manufacturers, already well versed in handling incentive programs, to administer the deal. Another would be to have potential buyers pre-qualify for the rebate, by filing the required documentation to the government before they ever set foot on the dealership. The, pre-approval in hand, they would go car shopping.
Back at Benedict’s, deCordova is worried about more than when and if he’ll see the thousands of dollars he’s owed through the government rebate system, but also what will happen to car sales once Cash for Clunkers is done and dusted.
“The big fear is, what is going to happen tomorrow,” explained deCordova.
Bleyle also has his concerns about what the long-term impacts of the incentive program will be on car dealers. “The future remains to be seen,” the car dealer said, as he speculates on whether the program has indeed generated new sales, or simply “stolen” business from months ahead.
One local car dealer doesn’t appear to be concerned about the long term effects of the program, which they say is the best thing the government has done to date to help the struggling auto industry.
“This is better than a bailout,” said Paul Cirello, sales manager at Norwich Dodge Chrysler Jeep, explaining that the increased sales generated from the program have been a boon for both dealers and manufactures. And consumers have benefited has well, he said. “It’s helped out everyone.”
While Cirello said the program would have worked more smoothly if the funding process had been accelerated, he isn’t complaining. According to him, his dealership had already received reimbursement for all but three of the 18 cars they’d sold by mid-week.
There was no cutting off the deals early for the Dodge Chrysler Jeep dealership. As of yesterday, a sign on the lot still proclaimed “Full Throttle Ahead” for Cash for Clunkers.
“We’re going right until the deadline,” Cirello said.
“It’s really put a strain on our resources,” said Trip deCordova, president of The Benedict Corporation. His GMC, Cadillac, Pontiac and Subaru dealership has more than 20 applications still in limbo, he said, which translates into more than $100,000 they have yet to collect.
The Norwich car dealer knows he’s not the only one still waiting to see any cash for the clunker deals he’s sealed.
“We’ve heard all sorts of rumors,” he said, describing reports he’s read in industry magazines of larger dealerships who were still waiting on a million dollar or more. He personally knows of one dealer who has received payment on only two of the 100 cars he sold through Cash for Clunkers, and another in Wisconsin paid for just three of the 80 they sold.
While deCordova said Cash for Clunkers has been successful in the fact that it has stirred up consumer interest in purchasing both new and used vehicles, he still calls the execution of the program an “administrative nightmare” for dealers.
“I don’t think they had any idea how this would go off,” he said.
Since the Cars Allowance Rebate System (CARS), as it is officially known, commenced car owners across the country have been taking advantage of the program, trading in their old gas guzzlers in exchange for up to $4,500 off new, more fuel efficient models. According to an Automotive News report, the U.S. Department of Transportation reported that more than 635,186 transactions totaling $2.65 billion had been processed as of 7:47 a.m. Monday.
The number of transactions has repeatedly overwhelmed the government website he and others dealers use to file applications. On Friday, deCordova said, the site was down for 4 hours and entering six deals, which should have taken less than an hour, took five. He was keeping his fingers crossed Monday morning, hoping that they wouldn’t experience similar problems with the site as dealers across the country tried to get applications in before the 8 p.m. deadline.
The site did in fact experience more problems Monday afternoon, prompting the DOT to extend the submission deadline until noon today. There was no extension, however, on Cash for Clunker sales.
Hank Scudder, general manager of Christman Motors in Norwich, wasn’t concerned about the Monday cut-off date. Why? Because the Chevrolet and Buick dealer had already put an end to Cash for Clunkers sales on Saturday.
“It was very tough on dealers,” said Scudder, who reported that Christman’s has yet to receive payment on around a dozen deals. Based on even conservative estimates, that means the dealership is waiting on between $40,000 and $50,000 in government rebates.
“Dealers don’t have the kind of working capital to float,” he said, although some car dealerships were willing to take more of a risk than others.
“We were very careful,” reported Scudder, who admitted that if they had been more confident in the way the program was administered on the federal level, they would have been more likely to jump in “with both feet.”
That said, Scudder wasn’t completely dissatisfied with the program. It certainly did help drive traffic at the dealership, he reported. And while not every potential buyer was a candidate for the Cash for Clunkers program, that didn’t stop them from converting the interested party into a vehicle sale.
According to Jim Bleyle, the program did succeed in sparking an interest among consumers and increase the number of potential car buyers visiting Chenango Sales, the dealership he co-owns south of Greene. But the mix of people it brought in, weren’t exactly what he was expecting.
“I thought there would be more local people,” said Bleyle, who reported that the Ford, Lincoln and Mercury dealership saw a flood of prospective buyers from outside the area. Many, he explained, were from more metropolitan areas where dealer inventories had already been depleted. Bleyle and his partner, Byron Miller, exercised caution however.
“We decided that if we were going to stick our neck out, we’d do it locally,” Bleyle explained.
And who can blame them, when on average 80 percent of applications were being rejected across the board. The burden of proof was on dealerships to gather and verify the necessary information and documents, he explained.
“We became policemen in this program,” he said, adding that if Cash for Clunkers is repeated, perhaps that onus should fall more on consumers.
Like Scudder, Bleyle cut off sales on Saturday. So far, none of the applications they have succeeded in filing have been denied, but it took 18 days for the first two deals they made under the program to be officially approved and another two days before they received payment.
Approximately five more applications are still pending, he said, one of which is already at that 18 day mark.
At Smith Ford, LLC in Norwich, General Manager Will Tyrrell has applications pending which have already hit the 20-day mark and has still yet to see a penny of the roughly $40,000 he expects to receive through the rebate program.
“All of our claims are legit; they should go through,” he said. Despite his confidence in the accuracy of the paperwork he has submitted on behalf of his dealership, he still has concerns, particularly over what will happen if some deficiency is found in one of those applications after the submission deadline.
“It does make you worried,” Tyrrell said, as at this point, if one of those applications is rejected and can’t be resubmitted it is the dealership, not the car buyer, that will have to “eat” the loss. “That’s taking a pretty big gamble.”
Adding to his concern is the fact that many of the cars sold through the program were smaller cars and trucks, where the dealership makes only a small margin. If any of the rebate claims sour, it could wipe out the profit on several vehicle sales.
Smith Ford LLC cut off sales through the Cash for Clunkers program early last week, several days before the Transportation Department announced it would halt CARS well in advance of the original Nov. 1 deadline.
“We wanted to make sure we were going to be reimbursed,” he said, explaining that decision.
Even after they pulled their own plug on clunkers deals, Tyrrell said they continued to receive calls about the program. That hasn’t made him regret the decision to end participation early, as the dealership has still been successful in converting that interest into sales at both Smith Ford and their sister lot, The Giant’s Warehouse.
“We’ve still been able to sell cars without it,” he said.
While the intentions of Cash for Clunkers is good, Tyrrell has some suggestions for the federal government if they ever decide to offer a similar deal. One option would be to allow car manufacturers, already well versed in handling incentive programs, to administer the deal. Another would be to have potential buyers pre-qualify for the rebate, by filing the required documentation to the government before they ever set foot on the dealership. The, pre-approval in hand, they would go car shopping.
Back at Benedict’s, deCordova is worried about more than when and if he’ll see the thousands of dollars he’s owed through the government rebate system, but also what will happen to car sales once Cash for Clunkers is done and dusted.
“The big fear is, what is going to happen tomorrow,” explained deCordova.
Bleyle also has his concerns about what the long-term impacts of the incentive program will be on car dealers. “The future remains to be seen,” the car dealer said, as he speculates on whether the program has indeed generated new sales, or simply “stolen” business from months ahead.
One local car dealer doesn’t appear to be concerned about the long term effects of the program, which they say is the best thing the government has done to date to help the struggling auto industry.
“This is better than a bailout,” said Paul Cirello, sales manager at Norwich Dodge Chrysler Jeep, explaining that the increased sales generated from the program have been a boon for both dealers and manufactures. And consumers have benefited has well, he said. “It’s helped out everyone.”
While Cirello said the program would have worked more smoothly if the funding process had been accelerated, he isn’t complaining. According to him, his dealership had already received reimbursement for all but three of the 18 cars they’d sold by mid-week.
There was no cutting off the deals early for the Dodge Chrysler Jeep dealership. As of yesterday, a sign on the lot still proclaimed “Full Throttle Ahead” for Cash for Clunkers.
“We’re going right until the deadline,” Cirello said.
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