Clunkers stutter toward finish line


The program was hot enough to burn through two rounds of funding, but cash for the program is again running low (or gone), and get-it-done-now dealers are finding it difficult to partner with the slow ways of the government. And as the program winds down, a car dealer organization is looking at an industry-sponsored alternative program.

The timing problem at the dealer level is simple – the cash moves back and forth rapidly between customers, dealers and lenders. The government isn’t geared to move at the same speed, and that problem is exacerbated by the fact that there was no particular effort to bulk up the staff handling dealer Clunker claims. That leaves many dealers unable to pay back very short-term loans, and as a result, many have discontinued participation in the program.

Department of Transportation Secretary Ray LaHood says that everybody will get paid, however, and reports note that he has tripled the number of people processing claims.

Meanwhile, the National Automobile Dealers Association has become convinced that the industry has already burned through the entire $3B allocated to Clunkers, which most reports had coming to an end some time in September. One dealer noted that Clunker business leveled off after a strong start, but it still seems to be ending abruptly.

Dealers do not want to return to pre-Clunker business levels, however, and have their eyes on the 90% of US consumers who simply did not qualify to participate in the program.

To that end, large dealers are kicking off the industry’s own $4.5K rebate plan, without any government involvement. Details are available at

The private plan offers more modest MPG margins and numerous other options for consumers. It also is seen as a way for dealers to acquire quality used inventory.

RBR/TVBR observation: So maybe all good things don’t have to come to an end. Anything that helps bring the automotive category back to sustained life is a good thing. Do not lose touch with your dealership clients just because Clunkers peters out.