Thursday, July 30, 2015

'Clunkers' program hit many bumps in road

WASHINGTON - It has revived business at car dealerships, taken gas-guzzlers off the road, and given a badly needed boost to struggling auto factories.

Yet as the "Cash for Clunkers" program winds down, there is another lasting image: the hasty planning and troubled execution that nearly derailed the program early on and led some frustrated dealers to drop out amid long waits for government reimbursements.

Responsibility for the $3 billion stimulus program's flaws is widely spread.

Congress deeply underestimated how many people would be lured to dealerships by rebates of up to $4,500. Initially, lawmakers committed just $1 billion, an amount that was burned through in just a few days.

Transportation Department officials, presented with just 30 days to get the program up and running, were overwhelmed by the heavy response from consumers. Systems set up to handle and reimburse dealer claims were swamped.

Government rules to prevent fraud created paperwork requirements that many dealers did not fully understand.

Hungry for sales, dealers made "Clunker" deals weeks in advance even though they were advised against it. This created a big backlog the moment the program officially began. And many are still filing bad paperwork that is holding up claims.

Still, "Cash for Clunkers," which will end tomorrow evening, has been a huge hit with car buyers.

But Congress only set aside about a month for the program to get up and running and picked the National Highway Transportation Safety Administration, which had never run a program like it before, to chaperone things. It was swamped almost from the moment dealers' applications began rolling in.

Part of the reason for the backlog in paperwork is that dealers ignored government warnings and started cutting "Clunkers" deals weeks before the program began July 27.

And many "Cash for Clunkers" deals were not approved because dealers did not write "Junk Automobile," on the title of the older cars that buyers were trading in.

Officials say the tough rules are needed to prevent fraud.

Associated Press
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