The Car Allowance Rebate System has not paid local auto dealers for trade-ins received to purchase new, more economical vehicles.
A light blue, late 1970s Concord sits nose down in front of Town and Country Chevrolet on Highway 99 outside Ashland. The classic American Motors Corporation clunker alerts possible car buyers that the "Cash for Clunkers is going on now" at Town and Country.
To date, the Car Allowance Rebate System (CARS) — or Cash for Clunkers program — has not paid local auto dealers for trade-ins received to purchase new, more fuel-efficient vehicles. The backlog is nationwide as the popular stimulus program continues to bring much-needed business to the beleaguered auto industry.
The Associated Press reported Wednesday that hundreds of auto dealers in the New York Metropolitan area have withdrawn participation due to lack of payment.
Local dealers say the delay in payment is unexpected and sometimes frustrating, but does not lessen the program's positive impact. The popularity of the program was pointed out by National Public Radio reports, which called the incentive "the most user-friendly of the Obama administration's stimulus programs."
"We love this program," said Derek DeBoer, director of operations for Town and Country Chevrolet. "It has created opportunity and created business that needed stirring up."
DeBoer said business is normal, but the clunker program is "basically all we're doing right now," a fact confirmed by Town and Country sales manager Randy Crutchfield.
"Almost all of the new car business in the last 30 days has been from the clunker program," Crutchfield said. "It's a big incentive."
According to the National Highway and Traffic Safety Administration, which oversees CARS, the program started with an original budget of $1 billion on July 1. Congress has appropriated another $2 billion for the program, which is slated to end Nov. 1 or when funds run out.
Butler Automotive Group President Chuck Butler explained how the money is needed for working capital and, ultimately, how the delay in payment may affect potential car buyers.
"The person being hurt will be the consumer," Butler said. "We may have to refuse selling a car to a person because of this. The money owed to us is substantial; they have over 400,000 deals to look at right now."
Butler explained that, under the CARS program, the Butler group is owed approximately $400,000 from the federal government. He also said that, under the original deal, payment would have been received in 10 days, but it has been 30 days and no money has been received.
"It's going to probably push 60 to 90 days," Butler said, "but who knows? It is a good program and it's brought up business that hasn't been seen in awhile."
The CARS program is hiring more employees to deal with the backlog, according to NPR reports.
Under the rules of the CARS program, cars taken in trade must be permanently disabled. Town and Country has not yet destroyed these cars due to lack of payment.
DeBoer is confident that payment will be received, but said Town and Country is safeguarding its investment by holding off the destruction. Originally designed as an environmental program, CARS aims to get the older cars off the road for good.
"At this point, they are all parked," DeBoer said. "We have the chemical needed to disable the engine and we'll do it when we get paid, then we'll send them to the scrap yard."