More workers to handle car rebates

August 17, 2009 2:52:11 PM PDT
The Obama administration is tripling the number of workers processing Cash for Clunkers transactions as some dealers complain the government has been slow to reimburse them for the car incentives of up to $4,500 per vehicle. An administration official said Monday the Transportation Department hoped to have 1,100 public and private sector workers processing the vouchers by the end of the week, up from a work force of about 350 through the end of last week.

Employees at a department service center in Oklahoma City have taken the lead in processing the vouchers, the official said, and workers have responded to calls for voluntary overtime to process the forms. The official was not authorized to discuss the work force issues publicly and spoke on the condition of anonymity.

Dealers have reported submitting tens of thousands of dollars - in some cases more - worth of rebates to the federal government for repayment that are still outstanding. Many report they have been repaid for only a small fraction of the deals they made under the program, creating strain on cash flows at dealers nationwide.

Rick DeSilva, who owns Hyundai and Subaru dealerships in northern New Jersey, said an inspector from the National Highway Traffic Safety Administration, which is overseeing the program, visited his offices Monday to review his dealerships' paperwork. Until now, none of the 70 Cash for Clunkers deals DeSilva made have been reimbursed.

"Every car that goes out, you are $4,000 behind the 8-ball," said DeSilva, who is still owed about $280,000.

The National Automobile Dealers Association applauded the boost in staff reviewing the dealer claims. "Anything that will speed up the dealer reimbursement process is welcome news," NADA spokesman Charles Cyrill said.

The government said Monday that dealers have submitted requests for rebates that total $1.6 billion - more than half of the money provided to the program - through the online system set up to process and pay the claims. The program has led to more than 390,000 vehicle sales.

Rep. Joe Sestak, D-Pa., who is challenging Pennsylvania Sen. Arlen Specter in the state's Democratic primary, urged President Barack Obama to increase staffing levels in a letter Sunday. Sestak wrote that many dealers face a loss on each transaction until the government reimburses them.

"Carrying a loss for an extended period will put them out of business - meaning more lost jobs," Sestak wrote.

With the increased staffing, the government's work force is much larger than originally anticipated. A week before Cash for Clunkers formally began July 27, NHTSA estimated it would need just 30 new hires and 200 contractor workers to handle the program over a six month period, according to the guidelines drafted by the agency.

But dealers flooded the online reimbursement system shortly after the program began, overwhelming the computer system and staff set up to process the deals. That led to big delays for dealers trying to file the paperwork they needed to get paid back for the rebates.

Under the program, car buyers are eligible for vouchers of $3,500 or $4,500 depending on the fuel efficiency of the vehicles they trade in and buy. Dealers subtract the rebate from the sales price, and then submit paperwork to the government certifying the sale with the assurance that the trade-in will be scrapped.

NHTSA has told dealers they can expect to wait 10 days to be repaid if their paperwork is in order and the deal is approved. But if there is a problem, dealers must resubmit their claim, leading to another potential waiting period. Dealers typically borrow money to put new cars on their lots and must repay lenders within a few days of a sale.

Government officials have said some of the submitted paperwork has been incomplete or inaccurate, leading to delays.

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ON THE NET: www.cars.gov

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