The federal government has announced that its Car Allowance Rebate System (CARS) program will end at 8:00 p.m. on Monday, August 24. The news comes less than two weeks after Congress approved an additional $2 billion for the program.
Nationwide, dealerships are bracing for a busy weekend as consumers rush to trade in their old gas-guzzlers before the program expires.
President Obama says that the CARS program “has been successful beyond anybody’s imagination.” However, many including the president of the Greater New York Automobile Dealers Association, Mark Schienberg, might take exception with that assessment.
According to Schienberg, whose organization represents some 400 dealerships throughout the greater New York area, the government has dragged its heels about reimbursing dealers who have participated in the program.
Schienberg concedes, however, that aside from the government’s handling of dealer reimbursements the program worked well.
Ralph Fattore, owner of Downtown Toyota in Oakland, California withdrew his dealership’s participation in the program a week ago due to the delays in getting reimbursed. He claims that his dealership is owed $300,000 in reimbursements.
U.S. Department of Transportation Secretary, Ray LaHood, has promised that dealers will receive their reimbursements. LaHood says, “They’re going to get paid; we have the money to provide for them.”
Since the program’s inception last month, the Department of Transportation has received over 457,000 applications for reimbursement from new car dealers around the country. The agency claims that it has processed about 37% of the applications.
One reason for the backlog in processing, according to the agency, is the fact that many dealers ignored warnings to wait until the official launch of the program. Attempting to get a jump on the competition, many dealers began accepting trade-ins weeks before the program went into effect. Hyundai of America offered in-house rebates of up to $4,500 on qualifying deals with the intention of redeeming the vouchers once the Department of Transportation began accepting applications. As a result of this and similar schemes, there were thousands of applications waiting to be processed when the program launched on July 27.
President Obama called the situation a “high class problem” and said that the backlog in voucher processing resulted because dealerships “are seeing sales that they have not seen in years.”
The Department of Transportation projects that there is enough money in the CARS fund to continue accepting voucher submissions through Monday’s 8:00 p.m. deadline.
In an effort to streamline the process, the Department of Transportation has eased some of the more onerous rules and requirements. It has also tripled the number of employees assigned to the CARS program to 1,100.
Despite dealer’s concerns over the government’s failure to make reimbursements in a timely manner, most, like Sunnyvale Toyota general manager, Adam Simms, feel that the CARS program has been a success overall.
Sunnyvale Toyota currently has a backlog of 580 reimbursement applications, totaling some $2.6 million pending payment. Simms, however, is grateful. He says the program “has stimulated a lot of automobile sales,” and says, “We are anxious to get our money, but we appreciate the program.”