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'Cash For Clunkers' Hits Speed Bump

Delayed government reimbursements have caused many dealers to hold off on making new deals and some have decided to stop participating.

JACKSON, Miss. (AP) -- Joy from boosted auto sales and increased showroom traffic has been replaced by frustration as auto dealers wait for Cash for Clunkers repayments.

Delayed government reimbursements have caused many dealers to hold off on making new deals and at least one Mississippi dealer has decided to stop participating.

"I quit," Rudy Dossett Jr., of Dossett Big 4 dealerships in Tupelo said. "We have told people 'Come get your clunker and go somewhere else.' I don't want anything to do with the program."

Dossett, who sells GMCs, Buicks, Cadillacs and Hondas, has 11-14 applications awaiting approval but will not do anymore.

He said he is owed about $45,000 for clunkers and has not heard when he might get the money.

Dealers are to be paid within 10 days after a completed application is submitted, according to the National Highway Transportation Safety Administration, which is running the program. But if an incomplete application is rejected, it goes to the back of the line when it is resubmitted. The agency is holding information sessions with dealers and has increased its computer network capacity to help process applications.

But dealers say the government is not meeting the timeline.

Watson Quality dealerships in Jackson and Canton submitted 48 applications as of Friday afternoon, general manager Cliff Mitchell said.

"We are still doing deals and still haven't seen any money yet," Mitchell said.

Walt Massey, chairman of the Mississippi Auto Dealers Association, said a majority of dealers, including him, have stopped accepting clunkers until some reimbursements arrive.

"It is an incentive for the consumer but they are putting the burden on the dealer to collect the money," he said.

The program aimed at replacing older vehicles with more fuel efficient models gives consumers a $3,500 or $4,500 credit depending on the vehicle.

Massey, who owns a GM dealership in Lucedale and four others in Alabama, said a $4,500 clunker credit is about triple the profit a dealership receives on each new car sale.

"We are not (just) waiting to get our profit," he said of the credit. "We are in the hole."

He said if a car sells for $18,000 and the customer receives a $4,500 manufacturer's rebate and $4,500 from the clunker program, then a dealer is left waiting for $9,000 -- half the sale price.

He said manufacturers pay dealers two to three weeks after a car is sold. In the meantime, dealers have to keep paying salaries and other operating costs.

Mitchell said because of the large volume his dealership moves normally, they have been able to wait on the government to fix problems with the system.

"There are not a lot of dealers with that type of cash flow," Mitchell said.

Dealers seem most frustrated by the lack of information coming from the government.

Dossett predicted some businesses that took in many clunkers may end up in bankruptcy because of slow government payments.

Massey and Mitchell said they have each assigned a full-time employee to file clunker applications with the government.

"This is a college graduate that I am having to pay $65,000 a year to sit on the phone," Massey said. The employee was recently on the hold for six hours without talking to a person, Massey said.

"It is a good-natured program and the purpose's intent is great for the consumer, dealer and good for the environment," Massey said.

Another concern has been whether funds will be gone and dealers will be on the hook for tens of thousands in unpaid reimbursements. And because they have to disable the vehicle engine, the trade-in vehicles are scrap metal.

As of Friday, the agency had received 358,851 applications nationwide valued at more than $1.5 billion. The program has a $3 billion pot and will run until Nov. 1 or when the funds are spent. The agency does not track how much money has been paid out.

But Massey said the program has been more popular than anyone contemplated.

"We need to give the government a little bit of a break. They weren't prepared and had no way of knowing what the response would be."

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