GM to reimburse dealers until Cash for Clunkers rebates arrive
If there's one thing that General Motors knows right now, it's that Cash for Clunkers is good for business. The automaker announced earlier this week that it was adding shifts at several assembly plants to increase production of popular vehicles in response to the program's success. So it would be a bad thing if, as the National Automobile Dealers Association has requested, the government suspended the program until it could sort out how many vehicles have been sold, how many rebates are owed dealers and, most importantly, how much of the government's $3 billion in funding is left.
But we've got trouble brewing thanks to the government's inability to process reimbursement requests from dealers fast enough. The backlog of requests continues to grow, and no one knows where in the pile the funding will run out. So, some dealers are voluntarily pulling out of the program now before they get stuck paying for rebates that won't be reimbursed.
This is the last thing GM wants its dealers to do, so it's stepping up to bridge the gap between the time a dealer submits a request for reimbursement and the government gets around to paying it. GM will begin providing cash advances equal to the amount of C4C rebates ($3,500-$4,500 per vehicle) to its dealers for every vehicle already sold under the program and any new transactions going forward. According to GM, that should give each dealer enough liquidity to keep operating while waiting for the government to cut a check.
Of course, since GM accepted billions of dollars in federal loans to avoid bankruptcy and then, after entering Chapter 11 bankruptcy anyway, emerged as partly owned by the U.S. government, the money's really all coming from the place. It just seems that GM has a better accounting department than the U.S. Treasury.
[Source: General Motors | Photo by Ethan Miller/Getty]
PRESS RELEASE
GM Statement Regarding CARS Program Rebates
In order to meet high customer demand for new fuel-efficient GM cars, crossovers and trucks under the Federal CARS (Cash for Clunkers) Program, the company will today begin providing cash advances to dealers which are equivalent to the amount of federal rebates which are being processed for that dealership's qualifying new vehicle sales. As a result, dealers will have the liquidity to run their businesses effectively in the midst of this extremely successful program, and to continue immediately delivering new vehicles to GM customers.
"Our sales performance in the past two months has exceeded our internal forecast by over 60,000 vehicles, largely driven by the CARS stimulus program," said Mark LaNeve, VP of U.S. Sales. "We want to do all we can to provide customers with timely new vehicle deliveries and dealers the liquidity they need to run their businesses. This will continue the sales momentum of our new fuel-efficient vehicles such as the Chevrolet Cobalt, Equinox and Buick Enclave."
GM intends to provide these advances for qualifying new vehicle sales already transacted under the CARS program, and will provide advances going forward as long as the CARS program is in effect.
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Reader Comments (Page 1 of 2)
Thomas 11:01AM (8/20/2009)
the money's really all coming from the _same_ place.
yes it is. At first I thought that this was really great of them. But you're right, it's not like there's much difference.
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Cody 10:38AM (8/20/2009)
"It just seems that GM has a better accounting department than the U.S. Treasury. "
Or one that just has ALOT less to account for. Just maybe.
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CB 11:01AM (8/20/2009)
The treasury just needs some more time to print the money. The printers only work so fast.
James 11:32AM (8/20/2009)
"But we've got trouble brewing thanks to the government's inability to process reimbursement requests from dealers fast enough. The backlog of requests continues to grow..."
And this is only for the reimbursement part (C4C)...imagine the Feds ineptness if we rely on them for our HEALTHCARE?!
US Gov't C4C Stress Test = FAIL
Goat Law 10:38AM (8/20/2009)
So the government(GM) is giving dealers cash advances until the government(Treasury Department) can actually pay them. BRILLIANT!!!
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Edsel 10:47AM (8/20/2009)
Yup, this is just another reason to dust off and re-read Joseph Heller's "Catch-22".
Big Mola 11:49AM (8/20/2009)
The other automakers should do the same thing and advance money to their dealers.
laser 10:45AM (8/20/2009)
Hmmmm.... this government can't process 250,000 cash for clunker claims in a reasonable amount of time and we are considering the Feds to manage healthcare? Simply brilliant.
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jim 11:07AM (8/20/2009)
The Feds are already managing health care for millions of Americans in a program called Medicare and another through the Veterans Administration.
Dealing with the billings of my mother's last hospitalizations through Medicare was much simpler that trying to get a plain English explanation as to why only part of a procedure I had was covered from my vaunted private health insurer. It took an intervention by my employers benefits manager to get the answer and low and behold those costs should have been covered.
British_Rover 11:18AM (8/20/2009)
@Jim don't forget medicade too.
Just today after over a year of fighting I finally resolved the last medical bill for my wife when she had to see multiple specialists last year. The company refused to pay even after I met my deductible and was trying to saddle me with more then 4,000 dollars of expenses on top of my 3,300 dollar deductible and the 4,000 dollars in premiums I pay a year.
Imag 11:29AM (8/20/2009)
Jim and British,
You are both just citing well-known examples of why private companies are much more efficient. They are doing just what they are designed to do: make money. The fact that providing actual health care is against their own interests is beside the point.
Personally, I love all the efficiency that has resulting in me having to battle through phone trees and offshore call centers so the companies I buy from don't have to actually pay someone from my own country to talk to me.
Faceless bureaucrats indeed.
Rocketboy 3:40PM (8/20/2009)
Jim... You're a lucky one.
When my Grandmother needed massive care around the end of her life, it was rather impossible for her to get the proper care. She spent her last months living in a hospital, as the gov't waiting list to get into assisted care was longer than she had left. Of course, if she had Private Care, there were rooms available.
Not to mention, the nightmare that was the paperwork to get Medicare/Medicaid to pay for anything in the first place.
Rob 10:46AM (8/20/2009)
Another glittering example of government incompetence. Next is health care!
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Sean 11:04AM (8/20/2009)
Every time I see "LOL AND THEY WANT TO RUN HEALTH CARE" I die a little inside.
If you don't know why, then you know absolutely nothing about the bill they are proposing, and you have no right to make any of the claims you have.
Rob 11:09AM (8/20/2009)
"you know absolutely nothing about the bill they are proposing"
Either do they, since apparently very few of them have bothered to read it.
Imag 11:36AM (8/20/2009)
Yeah - after all, the government is totally unable to:
- Provide fire and police coverage for 300 million people
- Manage and build the most complicated tactical and strategic military ever devised
- Provide safety net health care and retirement insurance that may not be perfect, but beats what private companies would have been able to do (yeah, the stock market would have been great for social security)
And you're right: there are no other examples of government run insurance ever working. Take FDIC, for example... oh... never mind.
Rob 2:29PM (8/20/2009)
The military and fire and police departments are all brilliant. They are required by a Constitutional mandate to protect the innocent and punish the guilty. Medicare, Medicaid, Social Security, public education, Fannie Mae and Freddie Mac etc. are all either bankrupt or abject failures.
The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people.
(US Constitution Tenth Amendment)
Imag 6:37PM (8/20/2009)
If you're going to support the constitution, I'm surprised you would be happy with the state of the military. The military industrial complex takes an increasing portion (almost half now) of my tax dollars and justifies it by starting wars with countries that are not even a threat to us. I would argue that the war in Iraq has made us less safe, not more so.
You're right: social services don't make companies lots of money, so they do not get advertised, so they do not get funded. We want to have the service but not fund it.
Health insurers make money by *not* providing care. How do they increase the amount of money they make? They provide less, or they cut off from care the people who actually need it.
Look, I make $200K a year and have some of the best health insurance there is. Why would I argue for a government plan? Because I think that an honorable, decent country spends money on making people well, not making people dead. Unfortunately, our country seems to have developed the exact opposite principles. When the constitution was written, there was not health care to worry about. I think at this point it should be a right, like police and fire protection, and I'm willing to pay for that. Why people seem to prefer to buy more fighter jets we don't need is beyond me...
fast_car 11:20AM (8/20/2009)
Yes, the government may be slower than some entities, but I'm all for getting people out there spending money. The sooner people open up their wallets, the sooner companies stop laying off people. This may be just for the auto industry, but I hope programs like this have a trickle effect that affect other industries.
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David 11:32AM (8/20/2009)
Gotta love when the government pays the government... now that IS economically sustainable, right Mr. Obama?
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