This is how healthcare will be run

The government always promises what it cannot afford and then forces private industry to pay for it. As the great Margaret Thatcher once said "socialism only works as long as it can take from the producers."

Feds slow to pay for clunkers, local dealers say

By PAUL PAYNETHE PRESS DEMOCRAT

Published: Thursday, August 13, 2009 at 3:00 a.m. Last Modified: Thursday, August 13, 2009 at 9:36 p.m.

Local car dealers say the biggest clunker in a federal rebate program aimed at getting gas guzzlers off the road may be execution of the program Despite hundreds of sales where buyers received instant discounts from $3,500 to $4,500, reimbursements to car-sellers have been few and far between.

The unexpected lag time has forced dealers to essentially bankroll the program, filling their lots with row upon row of tired trade-ins — and no money to show for it.
Bruce McConnell, whose Healdsburg Chrysler/Chevrolet dealership has not been reimbursed for any of the more than 30 vehicles he sold in the “cash for clunkers” program that began last month, said he’s now on the hook for more than $100,000.
“It’s enough to get me worried,” McConnell said. “We did our job. The government hasn’t upheld their end of the bargain.”
Larger dealers reported the same situation.
Henry Hansel, whose company sold more than 260 vehicles and is awaiting more than $1 million in reimbursements, said he’s asking customers to return their new cars and take their old cars back “if for some reason this thing backfires.”
But he said there are signs that the government contractor overseeing the payments is working out the problem and he is optimistic things will work out.
“We haven’t been paid a dime,” Hansel said. “But I have confidence it will get handled. We have been assured they will honor everything that’s been submitted.”
The program, dubbed the Car Allowance Rebate System, or CARS, allows car buyers to receive a rebate of either $3,500 or $4,500 if they trade in old vehicles that get 18 mpg or less and replace it with a new, more fuel-efficient car or truck.
It’s been popular with consumers and automakers, quickly exhausting an initial $1 billion startup allocation. President Barack Obama earlier this month signed a bill adding $2 billion more.
But the program’s delivery has hit snags.
Dealers who must pay for the rebates out of pocket and then wait to get reimbursed by the government have complained it takes days or weeks to get their claims processed, leaving them worried about getting repaid.
Lately, consumer groups have complained some dealerships are pressuring customers to sign agreements forcing them to repay their rebate if the dealership isn’t reimbursed for the sale.
The federal Transportation Department, which oversees the program, said car buyers are not required to sign the contingency forms to qualify for a clunkers’ transaction, but the groups said the waiver should be banned altogether.
A department spokesman did not return a call Thursday.
Neither McConnell nor Hansel require the written waiver. But Hansel customers make a verbal agreement to cover the rebate or return their car if the deal falls through, Justin Hansel said.
Both dealers have postponed disabling their trade-ins, as required under the program, in case the cars have to be returned or possibly be sold at auction.
More than 100 clunkers were parked Thursday in a lot behind Hansel Ford in Santa Rosa, awaiting their fate. McConnell’s back lot was filled as well.
“I made a deal with the buyer, and I will honor that,” McConnell said. “Anything from here on out is between me and the federal government.”
Several other North Coast dealers did not respond to requests for comment.
Hansel, who spoke by phone from a Toyota dealers’ conference in Dallas, said he’s commiserated with counterparts across the country this week. Only one Northern California dealer has been paid to date, he said.
Hansel said a Southern California dealer, Longo Toyota, has made more than 900 clunker transactions and has not been reimbursed at all.
“The reality is, this program exceeded everyone’s expectations,” he said. “Most of us figured there weren’t a lot of true clunkers out there. But there are a bunch of them. This offer was too good to pass up.”