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]
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.