Where's the cash? (for clunkers)

Seven On Your Side
August 21, 2009 9:54:56 PM PDT
This is the last weekend for the Cash for Clunkers program. The government program that promises up to $4500 cash back if you trade in a clunker for a new, more gas efficient model is set to end on Monday at 8pm. But if you hope to trade and drive out with a new car, think again. The dealers are now changing the way they do the deals, and this may not be good news for consumers.

Doreen Killard has a big time clunker, a 1993 GMC Safari. It's perfect for the government's cash for clunkers program.

Last month she traded it in for a new Ford Focus at Syosset Ford. She's supposed to get a $4500 cash in government rebates. Weeks ago, her dealership applied to the government. But today?

"They basically told me that they weren't releasing the car until they got their voucher for the $4500."

Doreen says the new car is still on the dealer's lost with a "sold" sicker on it.

"The concept is great, the execution is horrible." That's what the manager at Doreen's dealership, Syosset Ford, thinks of the government program. He said Syosset Ford has paid out a half a million to its customers in Cash for Clunkers money. How much has the government paid? Just $3500.

And Syosset Ford is not alone, the government says only 7% of all applications have been paid out. And even though the program says dealers must allow the customer to take possession of the new car immediately, it's a rule some dealers, like Syosset Ford, are openly defying. "Until we have an approval to go ahead and do a deal," said the resolute dealer. "We're not really gonna release the cars."

Close to a 500,000 cars have been sold since the Cash for Clunkers program started. Factories have called back shifts to keep up with the demand. But the program ends Monday at 8pm and dealers are worried they either won't get repaid or won't get applications submitted before the deadline.

"It's been that successful, the program, which is wonderful. It's coming to the point, again, that everyone is very, very nervous if there will be any money left at the end of the day," says Mark Schienberg of the Greater New York Auto Dealers Association.

So if you're going to a dealership this weekend, expect some confusion. Some dealerships who were participating in the pgroam, may drop out. There may also be some who make deals contingent on being approved so that they don't get left holding the bag for thousands. The government doesn't recommend consumers to sign contingency deals. If you don't want to, just walk out of the dealership.

But one major question before you buy this weekend. Will there be enough money to pay off these rebates? Industry experts are fearing there won't be. The administration says it's estimating new applications won't exceed the $3 billion dollar ceiling. But if it does who will pay for the rebates? The Obama administration said today it won't back additional funding.


Story by: Tappy Phillips

Produced by: Steve Livingstone