WASHINGTON — The National Automobile Dealers Association warned dealers late Wednesday of a “growing risk” of not being reimbursed for vehicles sold through the Cash for Clunkers program, which is quickly running out of money.
The industry group also raised the suggestion of an immediate suspension of the program if problems aren’t corrected.
“Given the rapid pace at which ‘clunker’ deals are being done, it is difficult, if not impossible, to accurately project the ‘burn rate’ of available funds,” the group said in a statement.
Transportation Secretary Ray LaHood said his department would unveil plans by Friday to wind down the program, and he sought to reassure dealers.
“The dealers are going to get their money,” LaHood said. “There will be no car dealer that won’t be reimbursed.”
He called the program the best- working part of the $787 billion government stimulus package.
“Car dealerships are not complaining that they’ve sold 300,000 to 400,000 new automobiles,” he said.
He said dealers were in some cases responsible for payment delays because they hadn’t properly filled out required paperwork.
Meanwhile, dozens of auto dealers in the New York area and at least one dealer in Maryland are pulling out of the program because of problems in getting reimbursed.
The general manager at Toyota of Bowie, Md., said the dealership stopped participating this week because it cannot afford to advance the money for more rebates while waiting on the government to pay. And about half of the 425 members in the Greater New York Automobile Dealers Association have left the program, according to the group’s president.
“We’re sitting with $1 million out,” said Jim Bee, general manager of Toyota of Bowie.
He said he has taken in between 150 and 160 clunkers and has not been paid a dime from the government.
As of Wednesday morning, auto dealers had submitted reimbursement requests for 435,102 vehicles and $1.81 billion.
About 23,500 vouchers were submitted, and $97 million in reimbursements requested, in the most recent 24 hours.
The National Highway Traffic Safety Administration has set aside up to $50 million to pay for the program’s administration costs.
With vouchers averaging $4,168, the program could subsidize about 707,000 vehicles — meaning it should be able to accept another 200,000 or so requests after today.
And when it’s done, LaHood said, it’s done: The Obama administration, which championed an additional $2 billion for the program after the first $1 billion was snapped up, has no plans to seek a third round of funding for the program.
“We’ve got our hands full right now,” LaHood said.
In attempting to squeeze more vehicles out of the $3 billion program, the government is canceling a $10 million national advertising program slated for this month because the incentives have become universally known through intensive news coverage and local dealer ads.
Dealers have consistently submitted around 20,000 voucher requests a day; at that rate, the program could last two more weeks.
The Washington Post contributed to this report.
