Cash for Clunkers $2.58b fever leaves many dealers scrambling

We’re in the final stretch now with less than half a billion dollars left to fund the now-famous Cash for Clunkers program. It ends tonight, with a report early this morning claiming that over $2.58 billion dollars has been promised to dealers participating in the program.

Dealers are excited about the program because of its immediate traction, pulling people into the showroom to purchase vehicles. But in many cases they’re also behind on the paperwork. Several detailed forms to fill out make the process tedious and on top of that the government is behind in processing claims.

That means dealers are essentially fronting the money until the government can catch up and pay its dues, assuming demand doesn’t outstrip the funding available. Cash for Clunkers originally started with $1 billion to give away and ended with an extension to $3 billion. Obviously most people will jump at the opportunity for free money and by using that lure, the program has acted as a sales magnet.

Some dealers are ending their participation early today, citing time constraints caused by the number of claims they already need to process. Regardless, politicians likely aren’t too concerned about upset dealers because they’re primarily interested in shifting public opinion; this time by highlighting a success story.

A general manager at a dealer near Philadelphia said “I have people upstairs, that's all they're doing — paperwork. The backlog is a nightmare, and it's starting to be a nightmare at the end.” At least dealers have a good problem on their hands in one sense from Cash for Clunkers: many of them are out of stock on fuel efficient cars.

The debate is still raging though on whether or not Cash for Clunkers was worth it, with some claiming that the program was giving people free money to do what they already were planning to do eventually. Not to mention that “free” money comes from the pocketbooks of fellow citizens who overall are backed up in debt to foreign nations.