• Jul 29th 2009 at 5:36PM
  • 17
As the whole "Cash for Clunkers" program has transitioned from Congressionally-passed legislation to NHTSA rule book, it has at same time gone from a great way to get old gas guzzlers off the road to something resembling a fiasco. Over the course of the past week, dealers have worried that they might be subject to income taxes on the rebates they collect and customers who thought they had qualifying clunkers learned otherwise.
Bailey Wood of the National Automobile Dealers Association, at least, has some good news for his group. According to NADA, there is no net taxable income from the rebates so dealers are off the hook. Of course they still have to pay the costs of disabling the cars they take as trades which involves filling the engine with sodium silicate to seize it up. Meanwhile Chrysler dealers are seeing an influx of potential customers for the first time in a while thanks to a decision to to double down on the rebates and match what the government offers.

Meanwhile, some customers are finding this week that there supposed "clunkers" no longer are while others can't get the efficient cars they want. The folks at the EPA went through their listings of fuel economy ratings on older cars to do some "quality control" on the numbers and ended up re-calculating the ratings for many older cars based on the new formula. As a result, dozens of cars went from combined mileage ratings of 18 mpg to 19 mpg, thus disqualifying them from the program. Conversely some new cars are now eligible that weren't before.

Finally some of the most sought after models are in short supply and thus unavailable for purchase right now. One prime example is the 2009 Volkswagen Jetta TDI.

[Sources: Automotive News, Jalopnik, Autoblog]

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    • 1 Second Ago
      • 8 Months Ago
      Hey, fniguy28-

      So, the "local dealer" (not named, of course) has sold fifty car under the program in two days. Sounds like an overwhelming success to me, give the sour market for cars.

      And he hasn't gotten a penny from the evil guv'mint yet! Gee, maybe the paperwork process is different than a bank ATM. Perhaps the CFC will take as long as a bank does to process a car loan and forward payment to the dealership - that's not instant either!

      And, as far as the tax, loan, and truth in lending bilge - that's simply full disclosure as required by banks and by law. Or would the writer prefer that the dealers dummy up the CFC as down payment so as to put folks in car loans they can't afford. Sure, that worked well with home mortgages.

      The CFC program is working very well for scrupulous dealers who use the program for its intended purpose (selling cars) and not as another tool to mislead customers for their advantage. I'll bet the program gets extended.
      • 8 Months Ago
      Has Autoblog been purchased by Fox news?
      Because some dealers needlessly worried that they would have to pay tax on the rebates this makes the program a fiasco?

      Because there was a net INCREASE in eligible cars this make the program a fiasco?

      Because Volkswagen didn't build enough Jetta TDIs this make the program a fiasco?

      We distort, you decide.
        • 8 Months Ago
        This program has been implemented very poorly. Here are some things to consider:

        1) The program was in play before the rules were decided i.e. they stated that trade-ins from June were eligible for the money, but that the rules were not yet set. Most children know not to play a game of cards before the rules are set, because the rules may change during the game. This makes for a chaotic game that you're quite likely to loose, even if you play really well. e.g. OK let's play cards, I'll tell you what the rules are after I deal ... Hmm, I've got an 8 of spades, 7 of hearts, 3 of diamonds, queen of clubs, and a 10 of diamonds. The rules are now set: my hand wins everyone else's looses, Ha!

        2) They went ahead and changed the rules while the game was in play -- telling some people that, um, actually, your car doesn't qualify, sorry, no soup for you! -- This is really bad. At a minimum, the old mileage figures should have been grandfathered in so as not to screw the people that were playing by the "rules".

        3) They finalized the rules while the game was in play. This gave the dealers absolutely no time to figure out the rules and prepare to use them. I'm sure that many bad car contracts have been made over the last few days, because the people making the contracts have not had the time to understand the rules.

        • 8 Months Ago
        amendol, what in the world are you blabbering about? The program only started the other day. People got high hopes after hearing about it while the legislation was still being drafted. If the final version does not match whatever interim version they happened to hear about, it's not the lawmaker's fault. As with any major bill, changes will happen between when the bill is proposed, and when it is signed by the president.

        The first date that I ever heard in reference to this program was late July, so anyone who thought cars bought in June would qualify were dumb for gambling that the final version of the bill would happen to include them.

        And boohoo for the dealers. If they haven't had enough time to figure out the program, they can tell their prospective customers to come back in a few days to give them a chance to understand the workings of the program. I don't believe there is anything in the legislation forcing a dealer to follow the cash for clunkers program. If they don't want to participate, they don't have to.
        • 8 Months Ago

        My mistake. It did not start in June, but in July. Here's the copy from the "day-one" document from cars.gov:

        "When Does the CARS Program Begin; How Will NHTSA Handle Trade-Ins That Are Made Between July 1 and the Issuance of the Final Rule?
        While the CARS Act makes transactions on and after July 1 potentially eligible for credits under the CARS program, interested dealers and consumers may want to wait until all of the detailed issues that must be addressed in the implementing regulations are resolved and the final rule is issued. Issuance will occur around July 23. At that point, NHTSA will have in place detailed provisions about establishing eligibility and a system to ensure the prompt payment of money for credits used under the CARS"

        So they allowed for the program to start before the rule was made. Yes this would be a bad idea for someone to try and use it before the actual rule is in place, but allowing the program to start before the rule is ridiculous. Starting the program the day after the rule is also ridiculous. They should have started the program several days after the rule so that there would not be a mad rush, with little understanding how the program works.

        • 8 Months Ago
        Nope. It's just they are no longer under the thumb of CNN, ABC, PBS, CBS (forged documents) and PMSNBC. Excuse me, there's another Democrat speaking on Fox News now that I want to watch.
      • 8 Months Ago
      My experience has been one of "fiasco". I've been trying to buy a car under this program since Friday. Every time the sales people say "sure we do cash for clunkers", but when it comes down to a contract they refuse to set one up, and tell me to try tomorrow.
      • 8 Months Ago
      i traded my 1988 dodge power ram, a 4-wheel , 5.2L V-8, 1/2 ton 8 foot bed for a 2009 chevy silverado with a v-6 on july 20. on aug. 13 they told me the contr.act was no good because my old dodge was a category 1 truck and the new silverado was a category 2. the definition of a category 2 truck included having more than 115 inch wheelbase. but, if any truck with the same "name plate" had a variety of wheelbases you had to go by the shortest. even though my wheelbase was 131 inches. dodge made some of these trucks with a 115 wheelbase.this ill concieved 115 inch cut off puts only dodge 1/2 ton trucks into category 1 with the little trucks
      • 8 Months Ago
      "it has at same time gone from a great way to get old gas guzzlers off the road to something resembling a fiasco"

      I'd say it failed at getting old gas guzzlers off the road to begin with; in Baltimore City, the problem is not 10-year-old Jeeps, it's late-70's, early 80's rustbuckets held together with duct tape and baling wire. Some of them don't even have catalytic converters! All ineligible for CARS.

      Also there's the part where you have to be buying a new car to get the cash; most of the seriously egregious polluters drive these cars because they can't afford to buy a newer heap of junk for $1500, much less take on a car payment for $15,000.
      • 8 Months Ago
      We did a CFC deal trading in a 1997 Toyota 4Runner that was deemed a "gross polluter" under CA emssions laws for a 2010 Toyota Prius.

      I pushed for the $4500 plus the scrap value of the car, and they were like, there's no scrap value, it's going to cost us money for the sodium silicate to disable the car, and then we have to pay to ship it to where it will get scrapped for $100, which won't even cover transporting the car. We're going to lose money on the deal.

      And I thought, yeah, lose money like you're 1) not getting $4500 in the first place which will easily transport the car wherever it's going and 2) we wouldn't be buying the 2010 Prius if it weren't for the program.

      We got to the dealer at 11:30, and left about 6:30. It was the worst car buying experience of my life, but part of it was the negotiation process, and part of it was they had no idea how to deal with the CFC situation.

        • 8 Months Ago
        The Dealers are on the hook for the $3500/$4500.....
        If for some reason the fed's don't approve the deal.
        A Local dealer has completed nearly 50 of these CFC and has not been reimbursts one penny from the govenment yet

        In California the State Francise Board have instructed dealers to apply the $3500/$4500 voucher before sales tax is calculated on the selling price of the vehicle


        You buy a $30,000 vehicle and qualify for $4500.00 CARS Rebate Voucher
        The dealer has to disclose the selling price of the vehicle on the sales contract for $25,000.00 which is taxable and the on either line 1C/D/E of the contract the dealer has to then disclose the $4500.00 cars rebate voucher difference which is none taxable then the dealer has to add both the $25,000.00 and $4,500.00 back together to show the price of $30,000.00........

        The banks and "Truth in Lending"
        Dealer has to disclosed to the banks if the contract is being financed......
        The government states that the $4,500.00 CARS Rebate Voucher has to be used as a down payemnt or part of the full payment..........
        Dealer may have to notify banks that the government has assisted the buyer in obtaining financing due to the $4500 Cars rebate Voucher as a down payment
        If the consumer does not have a down payment and instead recieved a Rebate voucher from the government there maybe a "truth in lending" trigger...
        If your vehicle is salvaged prior to the CARS program then it does not qualify
      • 8 Months Ago
      The Fed’s total blew this just like everything else. They made it much more complex than it needed to be. They should have done it by the MPG Improvement spread and scrap all of the other BS. It should work like this, if the difference between your trade and the new vehicle is 5-9 MPG gain you get $3,500 or if the gain is 10+ MPG you get $4,500.

      The new car I wanted on Monday 7/27 qualified for $3,500, the dealer did a dealer trade to get the color and trim level I wanted and we were going to close the deal yesterday. He double checks the government website and now the new vehicle doesn’t qualify, I’d have to get the 4 cylinder version which now qualifies for the $4,500 refund.

      Now the rules are regardless of MPG Spread Gain the new vehicle has to get 22 MPG and the Fed’s keep changing the MPG database on a daily basis. Stay tuned for more changes.
      • 8 Months Ago
      ABG again reprints (counting the AB reprint of the story) the Jetta TDI shortage despite all the commenters showing it is probably a regional issue.

      What gives, ABG? Are you making up your own news?
        • 8 Months Ago
        It's called fact checking. Apparently, it's something that online news sources don't need to do.
      Muscle Dude
      • 8 Months Ago
      Read this article: The Real Reason for the "Cash for Clunkers" Suspension. The ex car salesman blog shares exactly why they stopped the program. Even reports that some sales managers are calling asking for the money back because they were denied the rebate when the final paperwork was submitted but their car was already ruined by dumping a solution in the engine. They now have no car. Scary. See: http://tinyurl.com/ml9sdo
      • 8 Months Ago
      cfc worked fine for me and my new 2010 Ford Fusion Hybrid. I traded a 1990 Landcruiser that got about 10 mpg for something that is now getting 50.5 mpg. No fiasco there. I called the dealer and they were prepared for cfc. I was prepared for cfc. Like all things, you get what you put into it.
        • 8 Months Ago
        That Landcruiser has (oops, had) a street value of over $3,500, assuming it wasn't a rust bucket.

        I understand trading it in. But it was a classic, man. Some of us keep rigs like that running.
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