Some Auto Dealers Still Await Reimbursement From Uncle Sam Despite Refueled Clunkers

Although the cash for clunkers program has been refueled with a $2 billion cash injection by Congress, some auto dealers' bank accounts are still running on fumes, waiting to get reimbursed by the government.

Dealers across the country are reporting that reimbursement issues continue to stall the wildly popular incentives program. They have submitted requests for rebates on 338,659 vehicles sold, at a cost of about $1.4 billion to the government, according to sales data summarized by Transportation Department officials.

David Wilson, a Toyota dealer in Orange County, Calif., told Automotive News that he has been paid for only three of 92 claims he submitted before Aug. 2, leaving him on the hook for about $374,000. In total, he has 450 unpaid claims filed for $1.9 million.

"I'm worried the government will run out of money before we get paid," he told the publication.

Brad Wood, a dealer in Salisbury, N.C., has 12 unpaid claims for $47,000 pending since Aug. 1.

"I've never experienced anxiety like this in business before," he told the auto publication. "If I don't get paid, I will have been working almost free for several months."

The Department of Transportation has said it is reviewing every clunkers application with a staff of 225 people.

The program nearly ran out of money only a week after it began last month. So Congress added $2 billion to the program this month, tripling the $1 billion fund that had led to big crowds at once deserted auto showrooms and extending it into Labor Day

Under the program, passenger car owners are eligible for a voucher worth between $3,500 and $4,500 if they trade in their gas guzzlers for new, fuel-efficient vehicles.

Several dealers told Automotive News that their applications were rejected because of procedural issues that they couldn't clear because they were unable to reach Transportation Department employees by phone or e-mail.

"While problems with application submissions for the clunkers program have been significantly reduced, getting approval for dealer reimbursement requests is still facing significant hurdles," John Lyboldt, vice president for dealer operations for the National Automobile Dealers Association, said in a written statement Thursday.

He said NADA is currently working with the National Highway Traffic Safety Administration to streamline the process and help dealers get paid in a timely manner.

He said several recent entries on the CARS.gov Web site, including issues relating to transaction contingency agreements and the timing of vehicle delivery, have created confusion.

Lyboldt said the burdensome amount of documentation required for submission is causing many applications to be rejected.

"Resubmitted applications are making a bad situation worse by adding to the backlog," Lyboldt said. "It is critical that before submitting the paperwork to NHTSA that every dealer double and triple check that every 'i' is dotted and every 't' is crossed."