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Government slow to pay back car dealers on clunkers

Auto dealers in the Beehive State and around the country have reported very slow response to their reimbursement requests for up to $4,500 per vehicle for the Cash for Clunkers program, and that puts many in a financial bind.

Dealers have reported submitting tens of thousands of dollars — in some cases more — in rebates to the federal government for repayment that are still outstanding.

"Early on, we had problems submitting (the documentation for) those vehicles that qualified for Cash for Clunkers, and then we were having a challenge getting our money," Jerry Seiner, owner of the Jerry Seiner Dealerships, which specialize in General Motors vehicles, told the Deseret News.

He said that last week, his dealerships finally began to receive some reimbursements from the federal government.

"It's a massive government program that has had very little time to be ramped up," he said. "We see it as a temporary problem that's being worked out."

The Obama administration appears to be doing just that. It announced Monday that it is tripling the number of workers processing Cash for Clunkers transactions to help alleviate the problem.

An administration official told the Associated Press that the Transportation Department hoped to have 1,100 public- and private-sector workers processing the vouchers by the end of the week, up from a work force of about 350 through the end of last week.

Seiner said Utah dealerships that are "working on very, very tight cash-flow situations" might find it difficult to operate under the pressure of not getting their money in a timely fashion.

He said it hasn't been a major problem for his group yet.

For some Utah dealerships, the issue of reimbursement is a real worry, according to Craig Bickmore, executive director of the Utah Automobile Dealers Association.

"They are very concerned; they need to be reimbursed," he told the Deseret News. "They've got a lot of money out there."

Bickmore said that overall the Cash for Clunkers program has been good for most every dealership, but the repayment issue has become troublesome for a number of local auto dealers.

Employees at a Transportation Department service center in Oklahoma City have taken the lead in processing the vouchers, the Obama administration official said, and workers have responded to calls for voluntary overtime to process the forms. The official was not authorized to discuss the work force issues publicly and spoke on the condition of anonymity.

Rick DeSilva, who owns Hyundai and Subaru dealerships in northern New Jersey, said an inspector from the National Highway Traffic Safety Administration, which is overseeing the program, visited his offices Monday to review his dealerships' paperwork. Until now, none of the 70 Cash for Clunkers deals DeSilva made have been reimbursed.

"Every car that goes out, you are $4,000 behind the eight ball," said DeSilva, who is still owed about $280,000.

The National Automobile Dealers Association applauded the boost in staff reviewing the dealer claims. "Anything that will speed up the dealer-reimbursement process is welcome news," NADA spokesman Charles Cyrill said.

The government said Monday that dealers have submitted requests for rebates that total $1.6 billion — more than half of the money provided to the program — through the online system set up to process and pay the claims. The program has led to more than 390,000 vehicle sales.

With the increased staffing, the government's work force is much larger than originally anticipated. A week before Cash for Clunkers formally began July 27, NHTSA estimated it would need just 30 new hires and 200 contractor workers to handle the program over a six month period, according to the guidelines drafted by the agency.

But dealers flooded the online reimbursement system shortly after the program began, overwhelming the computer system and staff set up to process the deals. That led to big delays for dealers trying to file the paperwork they needed to get paid back for the rebates.

Under the program, car buyers are eligible for vouchers of $3,500 or $4,500 depending on the fuel efficiency of the vehicles they trade in and buy. Dealers subtract the rebate from the sales price and then submit paperwork to the government certifying the sale with the assurance that the trade-in will be scrapped.

NHTSA has told dealers they can expect to wait 10 days to be repaid if their paperwork is in order and the deal is approved. But if there is a problem, dealers must resubmit their claim, leading to another potential waiting period. Dealers typically borrow money to put new cars on their lots and must repay lenders within a few days of a sale.

Government officials have said some of the submitted paperwork has been incomplete or inaccurate, leading to delays.

e-mail: jlee@desnews.com