
Most of you reading this know Brandtailers expertise includes extensive automotive marketing. That being said, I humbly defer to our level of industry knowledge when I say, “Wow, the fed sure knows how to screw up a rebate program…even ones they create!”
If you’re not up to speed on the latest federal government fiasco because you’d rather read the obituaries than the automotive trades (actually there hasn’t been much difference between them this year), here’s the short version of what’s happened so far with the “Cash for Clunkers” program.
After eight months in Congress, Cash for Clunkers gets approved. Obama signs it. Three weeks later (last week) it launches. It gives $3,500 or $4,500 rebates to consumers trading in eligible clunkers for eligible fuel efficient vehicles (Don’t get me started on where the money is coming from because I don’t want to use that kind of language).
The auto industry finally has something strong to offer. Within 72 hours car sales are going crazy. Dealers are gladly taking clunkers in return for federally subsidized rebates. The plan is designed so that the dealer can cover the rebate amount for the consumer and, after submitting the necessary paperwork, get reimbursed by the government. Uh, oh.
The fed sets up one website for the dealers to submit their reimbursement paperwork – about fourteen pages per sale that has to be uploaded, one at a time. You can guess what happens next. The system overloads, the site slows to a crawl, dealers get timed out, the site crashes time and time again. It ends up taking hours per sale, that is, if the dealer is lucky enough to get through the process at all. In less than four days a program designed to last four months is in chaos.
The NHTSA (National Highway Traffic and Safety Administration) is in charge of the program’s administration. They panic appropriately and, after estimating that less than 10% of actual sales have been processed, they send out an emergency alert halting the program. Their assumption is that the one-billion dollars in federal funding is already gone. Meanwhile an estimated 225,000 vehicles have been sold, with millions, and millions, and millions of dollars fronted by the dealers who assume they will be getting the money back. I’m amazed we didn’t hear about the highest number of heart attacks in under one hour when that alert went out.
So where does it sit now? Well, the House generously passed a quick $2 Billion financial increase to the program last Friday. Then they left on vacation for five weeks. They told dealers, “We’ll cover anything you SUBMIT through Tuesday, August 4th at midnight. But after that we make no promises until the Senate approves the increase.” Meanwhile dealers are left trying to explain this debacle to customers, while they hold their breath to see if they’ll actually get back all the money they fronted on the customers behalf. If the program fails to deliver its promise to the dealers, there will be an all new level of bloodbath in the automotive industry. For once in many peoples lives, it’s time to feel sorry for the car dealer.
The moral of the story? It’s the one we already knew – government and cars don’t mix.
Tags: Automotive Marketing, Cars.gov, Cash for Clunkers, NHTSA, rebate
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