Another day, another bad bit of news from the cash for clunker program.
Dealers interviewed by the Wall Street Journal are claiming that the government is moving too slowly to reimburse them for all the discounted cars they’re selling. As a result, dealers that don’t have a pile of cash to buffer themselves face some problems.
“We’ve got 155 clunkers on the ground and no money in the bank,” says Earl Stewart, owner of the Earl Stewart Toyota dealership in North Palm Beach, Fla. “We’re selling ourselves into a very negative cash-flow situation.”
With dealers on average earning about $1,000 on a new-car sale, most face a loss on each transaction until the government pays up. Mr. Stewart says the government owes him $672,700 in rebates and hasn’t paid any. “The more cars I sell, the worse it gets.”
This is a good problem to have. A month ago, we can’t imagine any dealer was complaining that too many cars were being sold. The DOT says its reimbursing dealers within 10 days, so dealers just need to be patient.
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