A former car salesman peels the onion on the "cash for clunkers" program and explains why it has basically collapsed under its own weight. The full story is here, my summary is below.
- The application per car is 20 pages! Because the information needed requires multiple sourcing, it can take dealers a few days to complete. Meanwhile, they've already credited the customer with the $3,500-$4,500 rebate, which comes out of the dealer's cash flow. Unless there is rapid turnaround by the feds to send the dealers the money, dealer rapidly are running out of cash reserves to float the balances. Basically, the dealers are loaning the government thousands of dollars per transaction.
- Dealers have to permanently disable the drive train of the trade-in by pouring a specified solution of sodium silicate into the crankcase. This must be done before the junker can give his required signature. But this solution is in short supply and many dealers have run out.
- Applications are completed on the CARS program's web site, but it repeatedly crashes because it can't handle the volume.
- Many applications are denied by the feds, but the trade-in "clunker" has to be junked before the application can be submitted. That leaves dealers holding the bag - an empty one. They are asking customers to pay the amount of the refused rebate or turn the car back in - but the customers can't get their trade-in back because it's already been junked. Denial of rebates happens for a wide range of reasons, including a single field on the 20-page application left blank.
But don't worry - Obamacare will be a model of clarity and efficiency. So will cap and trade, you betcha.
See also Prof. Mark Perry's piece, "Cash for Clunkers: 136 Pages of Rules and Regs; How Many Pages for Government Health Care?"
Today the US House approved another $2B for the program. Which does nothing to address the structural, inherent flaws of the program. But that's Congress - any problem can be solved by throwing our money at it. When, oh, when will the government ever learn that it has no money of its own?