Cash for clunkers – who’s going to get burned?

Has no one learned anything from the other government “deals” that have been made this year? The rules “change” and someone gets burned. ALWAYS.

How hard is that to understand?

The infusion of an extra two billion dollars into the Cash for Clunkers Program has opened up a great opportunity for many more people seeking new cars.

Have you already forgotten how the 789 Chrysler dealerships were hand picked for closure and were forced to sell their inventories to hand picked surviving dealerships? The common link, allegedly,  was that money had been donated to Obama’s competition during the election period from dealerships slated for closure.

How hard is that to understand? The government selectively chose the winners and losers in the Chrysler restructure.

Under the cash for clunkers program, someone is going to get burned while someone else will benefit. A reasonable minded person already knows who’s going to benefit. Who will get burned – beyond the obvious used car dealerships?

As of Thursday, August 13, 2009, the Department of Transportation announced that 338,659 voucher applications had been submitted totaling $1.4 billion since it’s inception on July 24. That total does not include government administrative costs that will have to be deducted from the $3B – estimated at a whopping $1,500 per vehicle.

Dealerships across the country are running out of cars and have started ordering more inventory.

Unfortunately, the rules have now “changed.”

In an announcement yesterday, the Obama administration “changed” the rules by announcing that consumers can now order the exact car they want from the manufacturer rather than be restrained by the dealership inventories.

Last night — with a sinking heart — I read a news report about a Toyota dealer that is repeatedly having his applications rejected for procedural issues. He has “skin in the game” with a total of 450 claims valued at $1.9 million. Of the first 92 claims,  3 have been reimbursed while 89 have been rejected for “procedural issues”.

The law requires that dealers pay claims of $3,500 and $4,500 within 10 days.

Dealerships across the country are anxiously waiting for reimbursement while their cash flow tightens.

Will the rejected voucher applications have to go to the bottom of the pile when resubmitted? Will the last remaining $1B be gone when those resubmitted vouchers reach the top of the pile again?

Who pays that voucher amount if the government rejects the submission? Obviously, the old cars are long gone and the deal can’t be cancelled.

The program leaves me with even more questions.

The taxpayers recently bailed out the auto industry to the tune of billions of dollars. Are we bailing out the auto industry once again to deplete the 2009 stock to make room for the 2010 models?

Will there be a trend for foreign dealerships to get caught holding the bag because of “procedural issues” while the preferred American auto dealerships profit?

Why are cars older than 25 years old not included in this program? Presumably, the big pollutants would be the really old cars.

As we crush the “clunkers” how large is the carbon footprint we’ve created on the old car and the new car combined? After all, a carbon footprint is left for every car manufactured as well as destroyed.

With unemployment inching up to ten percent — and the total U-6 unemployment rate listed at 16.3 percentis it wise to entice people into signing up for more debt?

If a person is driving a vehicle that is worth $4,500 (or less), wouldn’t that mean they couldn’t afford a new car to begin with?

Someone is going to get burned.

Anyone having information on this subject is encouraged to contact this site.

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