July 30, 2009

Nothing for clunkers

The so-called "cash for clunkers" program has stimulated car sales so much that, well, it's going tits-up as of midnight.

The government is suspending the explosively popular 'cash for clunkers' program at midnight tonight fearing it would go broke before it could parcel out what it still owes dealers for a huge backlog of sales.
Although it's been wildly popular with people who wanted to get new cars, dealers have been frustrated by all the red tape involved:
Dealers loved the extra sales, but some were already getting cold feet about the deals because of the difficulty in processing them.

One dealer was going to suspend anyway. Another says he's having to haul clunkers back to his lot that he already shipped to the junkyard just to disable them. Others say deals are being held up by red tape.

But rules governing the program totaled 135 pages. They required dealers to register and many started off the week just trying to get answers on a government-jammed website. The rules are "very confusing," says Pete Greiner, who has a Ford dealership that bears his name in Casper, Wyo. "The administration of the program is extremely tough."

Some dealers said demand has been so brisk, they feared the program could go broke in days or weeks.

One Honda and General Motors dealer in Fort Worth says he has 50 clunker deals that were being held up by paperwork. "We're going back to our second and third round with customers to have things signed," said Will Churchill, owner of Frank Kent Motor. "They keep coming up with new forms to sign," Churchill said.

Now the dealership is in a Catch-22 situation: he must destroy the engines of clunker trade-ins to be eligible for the program. But if the paperwork falls through, he could be stuck with junked, rather than still running, cars.

Gee, who could have possibly foreseen that a big government spending program like this could have a downside?

Posted by: Sean M. at 08:22 PM | Comments (4) | Add Comment
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