Consumer Car Buying Advice Blog

Four days after kicking off its CARS program the government is beginning to realize that there is such a concept as being too popular

The tank is close to empty

At Auto Credit Express, we posted an article last Friday, three days before the Car Allowance Rebate System (CARS) program officially kicked off, questioning whether there was enough funding to last through the end of October – the maximum allowable time for CARS.

Even at that early date, the math did not compute – especially considering the reports coming from retail dealers concerning the number of deals that had already been written and the number of new vehicles that had already been delivered, even before its official start.

At that time, the NHTSA had estimated that the $1 billion set aside for the program would allow dealers to sell, on average, 12 vehicles per dealership. But with many dealers already booking as many as 40-50 deals since the first of July (which, under program guidelines, they were allowed to do), the stage was set for a colossal overrun in funding.

Land of confusion

That, in and of itself, would’ve been bad enough, but legislators had only given the NHTSA 30 days to implement the program. This meant that rules had to be in place, dealers had to be registered and an IT infrastructure had to be created in order to handle the monumental task of processing registrations, claims and voucher funds to nearly 23,000 retail car dealers.

The results were, predictably, disastrous. Many dealers reported long hours of server timeouts before they could even register for the program. Processing deals was also a tedious procedure, as a large percentage of dealers attempted to catch up on the documentation process for dozens of deliveries, each (some worked their administrative staffs into the wee hours of the morning as they scanned documents, collated paperwork and electronically submitted deals to the CARS servers).

A victim of its own popularity

As of this writing, according to the Associated Press, 22,782 vehicles had been purchased through CARS as of late Wednesday and nearly $96 million had already been spent with, according to NADA spokesman Bailey Wood, “a significant backlog of ‘cash for clunkers’ deals that make us question how much funding is still available in the program.”

“in wikked haste is no profit” – Geoffrey Chaucer

The White House is said to be currently assessing the situation regarding the remaining funds in the program as well as the possibility of additional funding to continue CARS. It also should be remembered that in many of its original forms, the legislation called for nearly five times as much funding as the program was eventually given.

At the very least, additional money should be appropriated to wind down the program in an orderly manner so that both dealers and consumers are treated fairly.

Tags: auto credit, credit card, Credit Repair, fico 08, repossession, transunion

This entry was posted and is filed under New Cars. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.