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Dealers May Not Honor Clunkers Trades Amidst Government Uncertainty

The opinions expressed by columnists are their own and do not necessarily represent the views of

With the House pushing for another 2 billion to be injected into the cash-for-clunkers program, auto dealers have found themselves in a sticky situation.

Many dealerships are offering their customers the full $4,500 discount despite uncertainty about when or even if they'll be reimbursed by the government. This uncertainty stems from not only the grim news about the solvency of the program, but unnerving frustrations over the logistics of the reimbursement system.

"Once you get through the process of submitting one [reimbursement request], there's no way to know if they've got everything they needed. So we've to yet to see," said Bill Dowen, General Manager for Stevenson Toyota in Jacksonville, NC. "I think we assume that we will get reimbursed, but also we do it with knowing that there is some liability involved.”

Stevenson has only experienced about a 5% increase in sales. But other dealerships, such as Medlin Hyundai in Rocky Mount, NC, have doubled their business, making General Sales Manager William Witmire mostly happy.

“We love it. It's just been a good motivator for our sales people. It’s just nice to see people back out on the lot again to be honest with you,” he said. But when asked about his prospects for reimbursement, he was hesitant.

"We hope so, because we've got about 70 grand hanging out there."

Money for the program ran out just 7 days after it was instated, and the House immediately passed another 2 billion to try and save the program. Sen. John McCain has vowed to filibuster the proposal, telling Fox News “I not only wouldn't vote for the extra two billion, I was opposed to the initial billion.”

A survey of about two dozen dealerships across the U.S. revealed that most were highly concerned about the process for getting payment from the government, and moderately concerned about the possibility that the government wouldn’t pay them back at all.

“We're up, 30 percent,” said Taft Hefner, sales manager for Family Hyundai in Walton, VA. Family Hyundai was in the process of filing the paperwork for the vehicles it has sold, but had not heard anything back from the government.

“It’s a pretty big deal. It’s a difficult thing,” said Hefner.

Many of the dealerships who were contacted were simply too busy to respond to any press inquiries, a direct result of increased business from the cash-for-clunkers program.

“We sold every single car in the show room yesterday and they had to bring in new cars. I’m not sure if the government has responded to the applications,” said an operator who did not identify herself before hanging up at Melloy Nissan in Albuquerque, NM. “Everyone is way too busy to talk on the phone.”

Others were more than happy to speak at length about their concerns.

“We’re making a few dollars, but if I have to fight uncle Sam to get the money back it’s not worth it,” said Charles Delorenzo, the owner of Quality Jeep-Chrysler in Albuquerque, NM. “The computers are all down, there is so much paperwork, customers are frustrated because of the paper work and the value of their current car changing from the time they leave home to when they come in.”

Delorenzo said that Quality Jeep-Chrysler wouldn’t be honoring the cash-for-clunkers deal if they were still unsure about the prospects for reimbursement by close of business on Friday. Amanda Grover, the Corporate Controller of the Murdoch Hyundai Auto Group in Salt Lake City, Utah, said that its dealerships were also skeptical about continuing on with the incentive program. Their Hyundai branch in Orem, UT has 70 applications pending in the government system, and she compared the filing system to “pulling teeth.”

Many dealerships said that personnel were working as early as 5am and as late as midnight to try and beat the “slow period” during business hours where the government’s computer system was most difficult to operate.

“Knowing what we're dealing with, it is a government-run program. If we're all being honest, we want to say we don’t have the most confidence in what we're getting involved in,” said Dowen. “Really, this kind of open endedness – all we know is there's a billion dollars. After that runs out, do we get left hanging?”

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