Clunking Along: Lessons For Next Time

Posted: Aug 31, 2009 12:01 AM
Clunking Along: Lessons For Next Time

In the aftermath of the cash-for-clunkers boondoggle, dealers have first hand knowledge as to how to do it better next time. Now, it’s just up to the government to listen.

For example, Scott Fink, owner of Hyundai of New Port Richey, Florida, questioned why the cash-for-clunkers payments couldn’t have been conducted without any of the cash-for-clunkers paperwork that caused such a massive headache. Fink suggested it simply be done via tax returns.

“At the point of sale, we have a document – a certification document. On that certification document, it had the consumer, and the consumer’s signature, and the consumer’s obligations. On the same document, there is a signature line for me as a dealer,” he explained. “So why wouldn’t that be enough to reimburse the dealers after they had fronted the cash-for-clunkers rebates? Over time they could process and do it like they do the tax return.”

Fink said the program had been such a boom for the car industry that it could probably work for other industries. And with over 530 clunkers moved, Fink’s dealerships stand to make considerable profit from the program, so long as the reimbursements come through. But still, he had perspective.

“Our kids and grandkids are going to be paying for these programs for years and years to come, so it’s definitely a two sided sword,” he said.

Don Jenkins, owner of Carolina Ford Fuquay-Varina and North Carolina Ford Mercury, had two main complaints. One was the blatant disregard the government had for dealerships’ employees.

“We had to have people doing the paperwork from like 12 midnight until 4:30am because the computers kept crashing during the day,” he said. Ignoring the realities of employees' capacities to work long hours went beyond simply ineptitude – it was negligence.

“They had so much volume, they just started rejecting early applications,” he said. “Everyone was real confused, because they would reject on, and they would agree, nothings wrong, and they’d say, okay, now you have to resubmit it.”

This caused employees to have to work overtime, including overnight shifts.

“The second thing,” said Jenkins, “even now that they’re geared up, the money is coming in very, very, very slow… I did close to 250 cars, so I have over a million dollars hanging out there. So its difficult if you don’t have the kind of cash flow.”

Jenkins had to talk to his bank about cash-flow problems, and eventually got them resolved. But smaller dealerships might be severely impacted by this, he said.

Don Riley, partner Alexandria-Hyundai, said that after all is said and done, he views the clunkers program as favorable, but that he doesn’t “know of a single auto dealer that isn’t glad it’s over.”

“I applaud them for doing it, because it got people off their couches and into the showroom,” said Riley. “They increased the GDP, and got people working back in factories. Overall, it’s one of the most effective things I’ve seen the government do, actually.”

In the 4 decades Riley has been in business, he said he had never seen anything close to the level of volume moved in such a short period of time.

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