In Md., Waiting For The Dough

Auto Dealers Looking For 'Cash For Clunkers' Reimbursement

August 18, 2009|By Eileen Ambrose | Eileen Ambrose,

Most Maryland auto dealers participating in "Cash for Clunkers" have yet to be reimbursed by the federal government, raising concerns about the financial pressure the program is putting on dealers.

Meanwhile, the U.S. Department of Transportation said it is working overtime to process an overwhelming number of claims and trying to make sure that taxpayer money is paid out only for legitimate transactions.

The Car Allowance Rebate System, better known as Cash for Clunkers, offers $3,500 or $4,500 to consumers who scrap a gas-guzzler and buy a more fuel-efficient new vehicle. The program kicked off July 24 and was so popular that it ran through its $1 billion in funding after about one week. Congress quickly passed legislation to provide an additional $2 billion.

Dealers essentially front the money for the cash incentive, and the government promises to reimburse them. In the first three weeks of the program, dealers submitted 358,851 reimbursement claims, according to the National Highway Traffic Safety Administration. As of last week, Maryland dealers had submitted claims for $34.4 million in reimbursements.

But few of those dollars have made their way back to Maryland.

"It's getting to the point where we can't keep sustaining this thing," said Peter Kitzmiller, president of the Maryland Automobile Dealers Association. "We can't afford to keep putting out money."

The regulations called for dealers to be reimbursed in seven to 10 days, Kitzmiller said. "That certainly hasn't been the case."

The Maryland dealers association surveyed 300 members last week about the program. Among the 70 respondents so far, fewer than 2 percent of claims for reimbursement have been paid. Nine percent had been rejected, while another 9 percent were approved but not yet paid.

Kitzmiller said the government owes some dealers hundreds of thousands of dollars and even millions.

Government officials say part of the problem is that dealers submit incomplete claims, which in turn cause delays.

Federal officials told auto associations last week that the government was assigning an extra 1,000 workers to process claims, Kitzmiller said. Dealers would be relieved if they started seeing an increase in the pace of reimbursements this week, he said.

Count Ed Dreiband among them.

Dreiband, owner of Northwest Honda in Owings Mills, said he sold about 75 vehicles under the federal program and is waiting to be reimbursed for $310,000.

"We haven't received one penny," he said. "We have bills to pay. ... I don't understand what takes so long."

Dreiband added that he can't afford not to participate in the wildly popular clunker program, either.

"If a person comes in here with a clunker and we say to them we're not going to take it ... they will go to the dealer next door and down the street," he said.

Not everyone is complaining.

"We love the program," said Buddy Singley, general sales manager at Thompson Hyundai in Dundalk. The showroom sold about 40 vehicles under the clunker program last month and expects to sell at least the same amount this month.

Singley said the paperwork isn't difficult, provided sales staff get all the information the government requires from the buyer upfront, such as proof that the consumer owned and insured the vehicle for at least a year.

He added that his showroom expects to get its first reimbursement this week.

Buying & selling

Top 10 new vehicles purchased

Toyota Corolla

Honda Civic

Ford Focus FWD

Toyota Camry

Toyota Prius

Hyundai Elantra

Ford Escape FWD

Honda Fit

Nissan Versa

Honda CR-V 4WD

Top 10 trade-in vehicles

Ford Explorer 4WD

Ford F150 Pickup 2WD

Jeep Grand Cherokee 4WD

Jeep Cherokee 4WD

Ford Explorer 2WD

Dodge Caravan/Grand Caravan 2WD

Chevrolet Blazer 4WD

Ford F150 Pickup 4WD

Chevrolet C1500 Pickup 2WD

Ford Windstar FWD Van

Source: Department of Transportation

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