First Up: September 2009

CHAIRMAN'S PAGE  
‘Clunkers’: fast sales, slow reimbursements

by John McEleney, NADA Chairman

The “Cash for Clunkers” program came to a close last month with nearly 700,000 older vehicles taken off the road and replaced with more fuel-efficient cars and trucks. Dealers ended up submitting reimbursement applications reportedly worth at least $2.88 billion, which is approaching the $3 billion provided for by Congress.

“Cash for Clunkers” has proved more popular with the public than anyone expected. With the end of the “Cash for Clunkers” program, it’s now all about dealer reimbursements. NADA is pushing to expedite dealer payments so everyone gets paid as quickly as possible. We have to make sure dealers will not be penalized by a loss of reimbursement for legitimate program sales for reasons outside of their control.

President Obama and Transportation secretary Ray LaHood are on record as saying that they know dealers are frustrated and that reimbursement is a priority.

Despite major glitches, “Clunkers” has brought a huge boost to showroom traffic and has been a real boon to the U.S. economy. According to the White House Council of Economic Advisers, the program will spur economic growth in the third quarter and create or save 42,000 jobs in the second half of 2009.

Another benefit: The average fuel economy of the vehicles traded in was 15.8 mpg, and the average fuel economy of vehicles purchased is 24.9 mpg—a 58 percent improvement.

It will be months before all of the ramifications of the “Clunkers” program become clear. But one thing is certain: The program would never have existed without the push by NADA dealer members.