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Tuesday, Aug. 25, 2009 RSSSEND TO A FRIENDPRINT
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NHTSA Again Allows Dealers More Time to File for 'Clunker' Reimbursement
Commerce Republicans Press DOT on 'Cash for Clunkers' Payments to Car Dealers
Auto Sales: Hangover Awaits After 'Clunker' Party
'Cash for Clunkers' Program Ends, But to Lasting Effect?
Chrysler Financial Eases Up on Dealers
Top Stories
NHTSA Again Allows Dealers More Time to File for 'Clunker' Reimbursement

Submission Deadline Extended Until 8 p.m. EDT, Today, Aug. 25; Reminder: ‘clunker’ sales may no longer be consummated effective 8 p.m. EDT, Aug. 24
At NADA's request, NHTSA again has extended the deadline for submitting reimbursement applications under the "cash for clunkers" program until 8 p.m. EDT, today Aug. 25.  All "clunker" sales should have been completed effective 8 p.m. EDT yesterday, Aug. 24.

The U.S. Department of Transportation asked NADA that the following message be conveyed to all dealers: "The CARS website has been fully operational overnight and will remain open for dealers to submit sales documentation until 8 p.m. EDT this evening. After that time, the system will be closed to new submissions. The deadline for completing new deals has already passed, so no dealer or consumer should agree to a CARS transaction today. Due to high user demand, dealers may experience some delay in accessing the system at peak times. If this occurs, dealers are requested to try again in 30 minutes."

Dealers who find themselves unable to successfully submit "clunker" transactions should send an e-mail to NHTSA at help@cars.gov to seek assistance in making timely applications.  Note, however, that sending this e-mail to NHTSA does not constitute a submission to the government.  In addition, previous e-mails sent by dealers to NADA documenting unsubmitted “clunker” transactions also do not constitute a submission to the government. The only way for dealers to be reimbursed is through NHTSA’s formal application process.

Assuming the government’s computer problems are resolved, applications submitted prior to today’s 8 p.m. EDT deadline that are later rejected may later be corrected or resubmitted, even if done after the deadline.  NHTSA has indicated that it will not process invoices that have been "created and saved," but not submitted.  Again, under no circumstances should dealers submit deals completed after 8 p.m. EDT, Aug. 24. Barring another catastrophic computer failure, it's unlikely that the 8 p.m. deadline tonight, Aug. 25, will be extended.
Source: NADA Newswire

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Commerce Republicans Press DOT on 'Cash for Clunkers' Payments to Car Dealers

Call for More Transparency in Program Implementation
WASHINGTON – Republican members of the Senate Commerce, Science, and Transportation Committee, led by Ranking Member Kay Bailey Hutchison (R-Texas), [Monday] voiced strong concerns to Transportation Secretary Ray LaHood on delays in payment to car dealers as part of the Car Allowance Rebate System (CARS) program. Joining Senator Hutchison were Senators Olympia Snowe (R-Maine), John Thune (R-S.D.), Johnny Isakson (R-Ga.), Roger Wicker (R-Miss.), Sam Brownback (R-Kansas), Mike Johanns (R-Neb.) and Mel Martinez (R-Fla.). The Senators' letter requests increased program transparency from the Department of Transportation and Secretary LaHood in the form of regular state by state updates on the CARS program, including: The total dollar amounts reimbursed to dealers; The average time it takes to reimburse dealers from submission of application through transfer of the reimbursement; and the number of denied applications, including those that are eventually accepted after resubmission. Click here for the letter send to the Transportation Secretary.
Source: Senate Commerce, Science and Transportation Committee

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Auto Sales: Hangover Awaits After 'Clunker' Party

DETROIT -- For a few frenzied weeks this summer, the U.S. auto industry has been partying like the good old days of 2007 -- before demand dropped off a cliff. Now comes the $3 billion question: with the government "cash for clunkers" incentives exhausted, how bad will the hangover be? The U.S. auto industry's long history of driving sales with steep cash and financing incentives suggests that the more than 600,000 "clunkers" deals may have robbed future demand. "I think clearly sales will drop. It was such a rapid acceleration so you always have some fall-off," National Automobile Dealers Association Chairman John McEleney said. "But I don't think it will drop down to levels of the 9 or 9.5 million units range where we were before the clunkers program because we started to see some demand recovery prior to the program and the program demonstrates there is pent-up demand," McEleney told Reuters.
Source: Reuters

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'Cash for Clunkers' Program Ends, But to Lasting Effect?

WASHINGTON — As the government's $3 billion "cash for clunkers" program spurred an apparent last-minute car-buying frenzy across the nation Monday, it remained unclear whether the popular rebate effort gave the ailing auto industry an important boost — or only a temporary reprieve. Experts were sharply divided. "The program worked beyond anyone's expectations. Look at how quickly the money was used up," said John Wolkonowicz, senior auto industry analyst at IHS Global Insight, an economic research firm in Lexington, Mass. Car dealers across the country gave the program good reviews, but with a touch of concern. "There is no doubt it has been successful," said Vicki Giles Fabre, the executive vice president of the Washington State Auto Dealers Association in Seattle. As of a week ago, however, dealers in the state had an average of $220,000 in exposure to the program, or were essentially owed that much by the federal government, Fabre said. Larry Carl, the executive vice president of the Automobile Dealers Association of Greater Kansas City, also found both consumers and dealers benefitting. "The approval process has been somewhat problematic," Carl said. "It's winding down, and you have 16,000 dealers across the country trying to submit their applications before the deadline."
Source: McClatchy Newspapers

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Chrysler Financial Eases Up on Dealers

DETROIT — Bowing to pressure from Chrysler dealers, Chrysler Financial last week offered them easier terms to establish expensive reserve funds. Some dealers said the reserves — which can run into the high six figures — threatened their financial stability. The lender says the reserves are needed to cover such risks as early loan payoffs and defaults of consumer loans. Chrysler Financial — rejected by the Obama administration as Chrysler Group's captive finance company in favor of GMAC Financial Services — told dealers last week they did not have to pay off the reserves all at once but could pay monthly installments. Chrysler Financial also gave dealers another option, saying it would recalculate the amounts for dealers who wanted to pay them off in one lump sum. The cash-for-clunkers program has strained many dealers' finances, Chrysler Financial said in a statement explaining the easier terms. The reserves had been one obstacle for dealers trying to switch their floorplan to GMAC or other lenders.
Source: Automotive News

Editor's Note: Chrysler Financial announced the changes to its Reserve Account payment policy following a detailed NADA letter to Chrysler Financial and a NADA communication to the Presidential Auto Task Force that identified several legal concerns related to the payment demand and the basis for the payment calculation. While maintaining the legal sufficiency of its Reserve Account payment policy, Chrysler Financial informed NADA on August 20 that it was revising its policy effective immediately and that, under either of the payment options now available to dealers, Chrysler Financial will terminate the UCC filings upon payment of the dealer's outstanding loans with Chrysler Financial.

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Quotable
 
"The program worked beyond anyone's expectations. Look at how quickly the money was used up."

   
-- John Wolkonowicz, senior auto industry analyst at IHS Global Insight, an economic research firm in Lexington, Mass., on the "cash for clunkers" program, McClatchy Newspapers, Aug. 24


"We've spent the better part of the last three days trying to hack our way into their computer program that has been down more than it's been up."

   
-- Alan Starling, who owns two General Motors dealerships in central Florida, on submitting "clunkers" reimbursement claims, The Associated Press, Aug. 25


"This program has been a lifeline to dealers. It's been a lifeline to the scrapyards who are getting these cars and can sell water pumps, and batteries and other parts. It's also been a lifeline to the credit unions and banks processing all these loans. It's been a win-win-win all around."

   
-- Transportation Secretary Ray LaHood stated at an event in Norristown, Pa., The New York Times, Aug. 24

Video Highlights
 

Keep or Scrap Cash for Clunkers? 
(CNBC)


Dealers, Detroit Look for Boost From 'Clunkers' (PBS)



Helping Dealers Left Out of New GM (Fox Business)



Media Coverage: The Tragedy of Dealer Closings (NADA-TV)



NADA's New Buy Now Campaign



No Dent in Demand for Some U.S. Cars (NBC)



Cutting Dealers a Mistake (Fox Business)



NADA on Floorplan Credit Crisis (NADA-TV)


John McEleney's Testimony to Senate Committee (CNBC)
 Senate Testimony on Floorplan Loans (NADA-TV)
 Banks Turning on American Car Dealers? (WTNH-TV)
 NADA Tackles Industry Crisis (NADA-TV)
 McEleney Speaks at NADA Convention (NADA-TV)
 Demise of Dealerships Leaves Big Dent (NBC)
NADA on the Front Lines  (NADA-TV)


Click here for more video reports.

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