Many dealer lots were depleted across the US yesterday as the ‘Cash for Clunkers’ scheme finished a day later than it was originally due to end. A sign of good business for carmakers and dealers, but many who saw the CARS website crash on the final day jeopardising their remaining rebate claims described the scheme as ‘a logistical nightmare’.
Under the programme, once a vehicle was sold, dealerships needed to apply for reimbursement from the federal government. Once approved, it was supposed to reimburse them with a $3,500 or $4,500 cheque. The cheque is still in the mail for many this week.
The US government initially set aside $1 billion for the scheme – officially called the Car Allowance Rebate System – but this was exhausted after just one week leading the White House to allocate an emergency $2 billion injection.
The original deadline for final submission for claims was 8pm EDT on Monday but following a website crash during the morning the deadline was postponed by 24 hours.
US Department of Transport officials said more than 450,000 transactions have been submitted by dealers, representing a total of about $1.9 billion. The department stated it has reviewed and processed more than 150,000 applications and approved $140m in payments to dealers during the programme. But many dealerships, overwhelmed by demand and administrative problems, report that the government was unprepared for the level of buying the scheme stimulated. By Monday morning the scheme had contributed to more than 600,000 vehicle sales.
One of the beneficiaries was GM, which said the scheme has increased interest and demand for its products and announced last week that it is increasing production to help dealerships replenish their stocks. Company spokesman Dan Flores told Automotive Logistics that it is boosting production by about 60,000 units, mainly in the fourth quarter, to help replenish dealer inventories. “We are working with all our suppliers to prepare for the production increase, including the increased demands on our logistic suppliers. They were notified of the pending production increases last week,” he said.
At Toyota increased production was underway in July. “In early summer we added 65,000 units incremental of production to the pipeline which started hitting dealers in July and will continue through September,” said Toyota Motor Sales spokeswoman Zoe Ziegler. “The 65,000 units include some of our popular models, Corolla, Camry, Sienna, Tacoma, Tundra and RAV4 – some of which are very popular under the CARS programme.
“These vehicles are starting to arrive right now, so they will be very timely and help stabilize inventory,” she told Automotive Logistics. “As these incremental production plans have been in place for some time now, our logistics services group is well prepared to transport the vehicles from the manufacturing and port sites to the dealership in an efficient manner.”
It now remains to be seen how the success of the scheme will affect future demand. "I think clearly sales will drop,” National Automobile Dealers Association Chairman John McEleney told Reuters. “It was such a rapid acceleration so you always have some fall-off. But I don't think it will drop down to levels of the 9 or 9.5 million units range where we were before the clunkers programme because we started to see some demand recovery prior to the programme and the programme demonstrates there is pent-up demand,” he said.