Wednesday, September 2, 2009

Auto dealers: Show us the money

Darvish is vice president of Darcars Automotive Group of Silver Spring, whose dealershis have sold more than 1,500 vehicles through the federal government's Cash for Clunkers program, which ended this week after about a month. But reimbursement from the government has been slow.

So far, Darcars has received payment for only nine deals and had nine others approved, Darvish said this week. She's not too worried about eventually getting paid in full, but she wonders how long it will take.

"I don't believe the federal government will stick anyone," said Darvish, whose group has dealerships throughout suburban Maryland, plus some in Baltimore, Southern Maryland and Northern Virginia. "I think we will be fully reimbursed eventually."

The program allowed consumers to get $3,500 or $4,500 off the purchase or lease of a new, more fuel-efficient vehicle if they scrapped their old ones. That means Darcars is on the hook for at least several million dollars from the federal government.

Maryland auto dealers requested $74.9 million in vouchers for the initiative through the program's final day on Monday. That ranked 12th among states, up from 18th after the first week, according to the U.S. Department of Transportation.

Nationally, rebate applications turned in were worth $2.88 billion. The program helped create or save 42,000 jobs in the second half of 2009, Transportation Secretary Ray LaHood said in a statement.

"Manufacturing plants have added shifts and recalled workers," he said. "Moribund showrooms were brought back to life, and consumers bought fuel efficient cars that will save them money and improve the environment."

The average combined fuel economy of the vehicles traded in was 15.8 miles per gallon, with the average fuel economy of vehicles purchased 24.9 mpg, according to federal figures. Four of the top five vehicles purchased are made by foreign manufacturers, led by the Toyota Corolla and Honda Civic. All of the top 10 vehicles traded in were American, led by the Ford Explorer and Ford F-150 pickup truck.

More than 2,000 workers are processing dealer applications for rebates, LaHood said.

Building back inventory

The rush of sales has cleared out inventory, and it will take a few weeks to build it back, Darvish said. But the program did get a lot of buyers into dealerships, she said.

Trade groups such as the National Automobile Dealers Association have called for more time for dealers to submit applications, citing computer glitches with the federal Web site.

Congress appropriated first $1 billion, then an additional $2 billion for the program, which was initially expected to run well into the fall.

The program has had its detractors, including used-car dealers. Simple vehicle maintenance would save consumers $30 billion, or more than 12 billion gallons of gasoline annually, much more than the projected savings through the clunkers program, according to the Automotive Aftermarket Industry Association of Bethesda.

The group, which represents manufacturers and distributors of auto parts and service, opposed the program partly because it destroyed vehicles that in some cases had many years of life and hurts the aftermarket industry, officials said.

This story originally appeared in the Business Gazette.

Maryland auto dealers have requested $74.9 million in vouchers through the Cash for Clunkers program. That total ranked 12th nationally. States whose dealers are seeking more, in millions of dollars:

-California: $326.8

-Texas: $183.8

-New York: $156.3

-Florida: $146.6

-Illinois: $143.6

-Pennsylvania: $138.7

-Ohio: $136.3

-Michigan: $132.4

-New Jersey: $103.4

-Virginia: $98.5

-North Carolina: $78.6

Source: U.S. Department of Transportation

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