Car lots brace for crush as ‘Clunkers’ closes

Auto dealers are bracing for a possible rush of last-minute shoppers before the "Cash for Clunkers" program ends Monday, but some buyers may find they won't be able to cash in on big government rebates.

Some dealers nationwide are increasing staff for the last weekend of the $3 billion program. But many say they will stop "Cash for Clunkers" sales after Saturday to make sure they get reimbursed by the government for the rebates of up to $4,500. Some reported traffic at showrooms began to swell Friday after the government announced the end date.

The weekend will be the last big push for the program that has helped revive sagging auto sales by allowing drivers to trade in older, less fuel-efficient vehicles for new more fuel-efficient cars and trucks. The program, originally expected to last for several months, is on track to exhaust its money in just over four weeks. It's been a big hit with buyers, but has led to hassles for dealers who have been paid for only a fraction of the rebates they've extended to customers.

Las Vegas area new-car dealers said Friday they are glad the government jump-started sales during the dog days of summer with the "Cash for Clunkers" program. But they are getting anxious about the snail's pace of government payments for the deals.

Tyler Corder, chief financial officer for Findlay Automotive Group, figures the government owes the dealership company $1.9 million for 480 clunkers.

The chain of 21 dealers has received payment on five of the transactions, which provide government subsidies of $3,500 to $4,500 depending on the vehicles' gas mileage.

Mark Grim, sales manager at Jim Marsh Kia Mitsubishi Suzuki, said the government is slow to even provide feedback. Some of the 20 clunkers the dealership received in trade have been under federal review for 20 days, Grim said.

Many dealers fear they will not be paid, Corder said.

While it is not the case with Findlay, some dealers have cash-flow problems and the delay in payments could cause some to fail, Corder said.

At first, the government insisted that the clunker engines be destroyed immediately, but it later changed that rule and allowed dealers to delay destruction until they get paid for the clunkers. Findlay is keeping the clunkers around as a partial safeguard so they can be sold if the government rejects clunker payment applications, Corder said.

That would not offset the loss entirely, however. "Obviously, these cars are not worth the $4,500 (some new-car buyers were given)," Grim said.

Wayne Frediani, executive director of the Nevada Franchise Auto Dealers Association, acknowledged that the government has been slow to pay.

"I think they are working as quickly as they can, but it's putting a lot of financial pressure on the dealers," he said. "The dealers need reimbursement in a timely manner."

However, "Nevada dealers did well under the program, no question about it," Frediani said.

Findlay's dealers will not do any "Cash for Clunkers" deals on Monday, the last day of the program, for fear the reimbursement applications are not completed by the 5 p.m. deadline.

Dealers are optimistic that the program's end will not cause a slump in sales.

Corder believes that most of the customers who traded clunkers were not planning to buy a new car before the government program was announced. He reasons that other drivers will continue to buy new cars "in the normal trading cycle" of used cars for new vehicles.

Grim also was optimistic: "Our sales have been up, and it has not been solely because of the government program."

For car buyers, the message from dealers is clear -- come prepared.

Many dealers say they won't make deals this weekend without all the proper documents for the car they are trading in. That means the title, proof of registration and proof of insurance.

The Associated Press contributed to this report.