Area dealers still waiting for 'Clunkers' cash

PHOTOGRAPHER: Ameerah Cetawayo

Local auto dealers say they’re pleased with the sales boost provided by the government’s “Cash for Clunkers” program but annoyed at the delay in reimbursements for rebates that gave buyers $3,500 to $4,500 off.

According to the National Automobile Dealers Association, the National Highway Traffic Safety Administration is required to pay qualified reimbursement applications within 10 days of when dealers have submitted them.

“The Treasury Department should send funds by electronic funds transfer within one to three business days after approval. In many instances, the government has not processed and paid deadlines in a timely manner,” NADA’s Web site says.

Just ask John Pallone, general manager of Allstar Chevrolet Oldsmobile Cadillac in Saratoga Springs, who has only been reimbursed for about 10 percent of his clunker sales, some of which have been waiting for more than a month. Pallone calls the process red tape reinvented.

“People have the cars. We have to pay our lenders for the floorplans,” Pallone said Tuesday. “We have endured all this money being out right now. It’s really putting a damper on some dealers who can’t meet their payroll. We’re OK, but I feel bad for the really small dealers.”

Pallone said his reimbursement applications have been getting rejected for minor errors.

“Each packet that is sent to the government has 20 different documents in them. If a “2” looks like a “3,” the entire packet is rejected,” even if the adjacent document clearing up the discrepancy is within the paperwork, Pallone said. “They seem to be rejecting the packets for reasons not understandable to us.”

When Pallone’s staff calls to get clarifications on the errors, he gets a different person on the phone each time. No two stories are alike, he said.

Adding to the annoyance is the time investment — 20 to 40 minutes per session to correct one submission.

Pallone said the government did not seem to be prepared to do the auditing needed and people who appear to lack experience in processing automobile-related documents may also be causing the delays.

“They could’ve hired the people who work at our auto auctions,” who often process paperwork for 1,000 to 2,000 vehicle transactions done in four hours, Pallone said.

“Why is it taking so long? [The government] seems to process tax returns pretty quickly. It feels like non-automotive people doing the work. There doesn’t seem like any continuity or any reasoning behind it,” Pallone added.

“Our sales people are very happy. We’re happy that we were able to move some cars because of the program. The downside is that we’re waiting for our money.”

George Kline, dealer principal of Johnstown Dodge, said he knew the reimbursement process was going to be a waiting game.

“As of a few weeks ago, there were $280 million worth of requisitions out there and they had only approved $51 million. So the math would lead me to believe it’s going to be a while before all of our [reimbursements] are done,” Kline said.

At a small dealership, the process hurts operations because of the cash flow shortage created.

“We’re looking at waiting for $40,000 of reimbursement — that’s still a lot of accounts receivable to have out there,” Kline said.

Johnstown Dodge had 10 clunker sales but has only received a voucher for one of the cars so far.

Rebate or not, banks and other lenders have to be paid for the new cars dealers financed to have in their showrooms, Kline said. “The banks are not going to wait for us to wait for that money from the federal government. Our floorplan provider wants to be paid for those cars when they leave the premises.”

Dealers like Johnstown Dodge and others are used to factory rebate programs that usually take about two weeks to be reimbursed directly from manufacturers, but the unusual delays of a month or more caused by the cash for clunkers program have set a new precedent.

“Right now, it would be a miracle if the federal government paid me in two weeks. It may be a month or more,” Kline said. “At this point, I certainly have faith that they will come through, but at the present time — whew — we’re footing the bill.”

Other dealers say they are not worried about the delay because they know they will be paid at some point.

“The program was great. We sold a lot of cars,” said Dave Dariano, general manager of Metro Ford in Schenectady, who has been reimbursed for about 10 percent of his clunker sales. “We’re not funded for all of them, but we have been funded for a portion.”

Dariano said the program was an overwhelming success that the government wasn’t prepared for, even after allocating more staff. He remains confident even though the reimbursement process is slow-moving, he said.

“We know we’re going to get paid. There’s not a concern on our end,” Dariano said. “They still have a bottleneck.”