September 4th, 2009
Cash For Clunkers has been over for over a week now, but only around 120,000 rebates have been processed so far. That means $500 million of the CARS program’s $3 billion has been spent, leaving dealers holding the tab on $2.5 billion in clunker deals. There are plenty of reasons for the hold up, starting with the impressive amount of paperwork due for each Cash for Clunkers sale. Things only get more complicated from there.
According to a Reuters article, there are only around 3,000 people responsible for reviewing and processing the 700,000 CARS applications, and most of those are contractors hired by the federal government. Citigroup, inc. is responsible for handling the majority of the paperwork, and so far no one has anticipated the amount of time it takes to process each application.
In response, the federal government has announced plans to speed up the rebate process, though so far it has been tight-lipped about how exactly that will be accomplished. So far, the goal is to have the remaining 580,000 applications processed by the end of September. That may not be great news for everyone, as a good portion of the applications processed so far have been rejected. According to the NADA, around 6.3 percent of all CARS applications were turned away for one reason or another. At this point, it’s unclear who will be left holding the bill on those vehicles, or what will happen to the rejected clunkers. [Sources: Reuters, NADA]