The NHTSA has responded to urgent pleas of car dealers who are running out of new car inventory.

Consumers can now order a car that is in production or in transit to a dealer and still qualify for the Cash for Clunkers rebate.   The car does not have to be physically in stock. 

The move came as dealers and automotive groups applied pressure on the NHTSA to meet local demand.  The ruling is not without controversy.

Dealers Can Now Factory Order CARS

Dealers who want to file deals for an ordered vehicle must first obtain the new car’s vehicle identification number from a manufacturer, NHTSA said in a statement. Reimbursement requests still must have all required documents for the trade-in vehicle. 

This adds an interesting development.  If the car will be arriving in September, dealers may not be able to add August factory rebates to the deal.

This decision looks like a win for consumers in local markets that have depleted inventory and a loss for dealers who took the risk to stock up on popular cars before the Cash for Clunkers program started.  Dealers who have contact us have mixed opinions on today’s latest change in CARS rules.

One dealer wrote to say:

 ”I invested over $500,000 to bring in extra cars for the program because I knew it would be popular.  I thought that I would have a strategic advantage and be rewarded because my local competition did not stock up.  Today’s decision took that away advantage.  This is just another example how changing rules have made it difficult for dealers to support the program.”

This is not to say that the dealer was not pricing their cars competitively.  It is just saying that dealers who took an entrepreneurial risk got up ended by the NHTSA.

From dealer reports, Ford was caught unprepared for the demand. Ford dealers we have surveyed have been the hardest hit by lack of inventory.  The industry veteran that we spoke with said that the NHTSA concession today seems to favor the Big Three US automakers that are low on inventory while foreign manufacturers seem to have more supply. 

NHTSA Clarifies Sales Practices

Dealers and consumers have been active on our forums regarding yesterday’s announcement that dealers cannot hold new cars on transactions that have all paperwork submitted.  Read our forums to see that many dealers are thumbing their noses at the NHTSA and consumers saying “NO WAY BABY”.

The Senate debate on the Cash for Clunkers spending bill was covered today on CSPAN and it was a long drawn out process but the outcome was positive.

The Senate finally voted to approve the $2 Billion dollar funding bill for the popular NHTSA CARS program. The funding will carry the Cash for Clunkers program through the Labor Day weekend.

We anticipate that the $2 billion in funding is already partially spent so the monies approved today will not last very long.

Car shoppers who qualify are encouraged to get out to a local car dealer as soon as possible.  This word of advice is to avoid being stopped out of the Cash for Clunkers program.

Automotive dealers have been pleased with the showroom traffic and interest in the CARS program but the funding can not last much past Labor Day based on current sales numbers released by the NHTSA and survey that we have taken.

Cash For Clunkers Checklist

Qualifying consumers are reminded to check program requirements BEFORE going to a local car dealers.  Here is are suggested steps for success:

1. Download our Cash For Clunkers Checklist
2. Using our checklist, go to www.cars.gov and qualify your clunker.
3. Understand that if you don’t qualify, your local dealer cannot change the rules.
4. If you want a local dealer to contact you, complete the form on the left or you can call ANY local dealer to see if they have the car you want in stock.
5. Review all factory rebates that may be added to your CARS credit. Check our list
6. Negoitate your best deal.
7. Keep in mind that you may not be able to drive away with your new car untill all your paperwork is approved by the government.

Video Snapshots From C-SPAN Video Coverage

Senator Richard Shelby says the Cash for Clunkers program is a “clunker”. He claims that many clunkers that were traded in would have been traded in normally without any stimulus needed.		Senator Johnny Isakson is an advocate for a Home Buyer Tax Credit plan to help stimulate the housing and real estate industry. Refers to Cash for Clunkers as a successful program and wants a similar plan for housing.
Senator Debbie Stabenow encouraged the Senate to continue the stimulus bill saying it is a tangible program that consumers can see and feel. She calls the bill a winner. She also asks that no ammendments be adopted which would derail the bill since House is out of session.		Senator Carl Levin urged the Senate not to add any ammendments to the House Bill which would put the death spike in the heart of the Cash for Clunkers Bill. He pointed out that many good amendements would have to be considered when the Senate returns in September.
Senator Jon Kyl wanted to introduce an amendment that would put the CARS program on hold to review spending and make sure deals that were submitted get paid. If the amendment was approved the CARS funding bill would be killed.		Senator Judd Greg claims that his amendment would make sure that the $2 billion in CARS funding debt is not passed to our children. If the Gregg amendment was approved the CARS $2 billion funding bill would have been killed for immediate future.
Senator Tom Coburn’s amendment proposed to give the clunkers to the poor and not to crush them. If his amendment was approved it would have killed the Cash for Clunkers spending bill since the amendment would require a House vote.		Senator David Vitter proposed an amendment on the TARP program which has nothing to do with the CARS program but any new amendments introduced today would kill the Cash for Clunkers funding measure.

Senate lawmakers will begin to debate this week the a measure which was approved by the House to provide $2 billion in additional funding for the Cash for Clunkers bill.

The bill was signed into law by President Obama on June 24, 2009 which put in play the creation of the Car Allowance Rebate System (CARS) which is operated by the NHTSA.

We predict that the Senate discussion will be far from friendly. In fact, the initial $1 billion in funding barely made it out of the Senate alive.

The original $1 billion in funding was appended to a larger spending bill and a motion was raised to strip the Cash for Clunkers funding out of the bill. A floor vote was called in the Senate and supporters needed 60 votes to keep the Cash for Clunkers bill alive; they got exactly 60 votes.

With the initial measure passing by just one vote, opponents of the original bill will be gearing up for an even stronger opposition in round two of the Cash for Clunkers cat fight. Some Senators have even threatened a filibuster to block additional funding.

CARS Program Broke

Without additional funding the Cash for Clunkers program may be called to an immediate stop. The initial $1 billion in funding is already gone and Washington can’t let the program run out of gas for too long.

If the Senate vote is blocked or delayed, Washington will be forced to come up with another way to supply the promised funds to reimburse car dealers for trades that have been submitted. The program roll-out has been far from smooth and the lack of clarity about funding is par for the course.

In spite of being out of cash, the NHTSA and Transportation Secretary Raymond LaHood have confidently said that the program is running as planned and has encouraged consumers to go out and purchase a new car under the CARS program.

Firm End Date A Better Choice

Dealers and consumers would be better off if Congress set a firm end date for the Cash for Clunkers program and not a dollar amount. This would take away the fear of funding running out and give consumers and dealers clear notice on when the last day of CARS transactions can be made.