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.

We have the final rules for the NHTSA Car Allowance Rebate System (CARS) in hand and we will continue to post our consumer comments and analysis.

To read commentary:  Click Here

Here is the 136 Page NHTSA Document: Cash for Clunkers FINAL RULES

Many questions remain unanswered.  The final rules may resolve some of the questions that consumers have raised.

Cash For Clunkers Rulings

We are hoping that the published document on the official NHTSA CARS website (www.cars.gov ) will answer some of these questions:

1. What do consumers do when their car is not listed on http://fueleconomy.gov?

2. Will cars with outstanding loans (liens) be able to be traded in for a CARS credit?

3. What procedures will be put in place to ensure that cars are not resold?

4. Will clunker owners that had short lapses in insurance or registration do to unforeseen circumstances be allowed to participate?

5. Will parents by able to pass their clunker credit to their children?

6. What paperwork will qualify as proof of continuous insurance and registration?

7. Will consumers get any part of the cash that dealers will receive from the salvage yard?

8. Will dealers be taxed for the CARS government credit as income?

Dealers can visit this special CARS dealer support website by clicking here: Dealer Website

The dealers dedicated website has new information on the program as well as a future section for marketing material compliance. This coming soon area is for dealers to understand and implement advertising program that are compliant with NHTSA rules.

The True Blue website will be very important for car dealers to bookmark during the lifespan of the Car Allowance Rebate System. The NHTSA picked a blue color scheme for the website to differentiate it from the consumer facing website which is lime green.

Do the colors mean that consumers will see all the green and car dealers will be crying to blues with all the paperwork and compliance issues that the program represents?

The website has a Dealer FAQ  page as well as well as a graphical depiction of the the dealer NHTSA interaction will look. View Images.

Dealers should see their official registration letters in the mail this coming week. The letters were mailed on Friday July 17th from an Oklahoma mail facility.

Our strong word of advice is to WAIT based on new documents posted on the official CARS website http://cars.gov.

As we write this post:

• Car dealers have not REGISTERED for the program because the NHTSA is not ready.
• Car dealers have NO forms, NO procedures or instructions on how to process a “clunker” for trade.
• Registered car dealers will be posted on the NHTSA site and no such list exists.

You get the idea: the NHTSA is working as fast as they can but it’s only been 6 days since the bill was signed.

We can not expect the NHTSA to create a system to register and track a few hundred thousand car sales in one week.  It is not practical to have policies and procedures in place to combat fraud.  This is a big undertaking and the team at the NHTSA must be working around the clock to pull this off.

The Keyword: Wait

Any car dealer that gives a consumer the CARS credit on a new car sales on July 1st runs the risk of complicating their reimbursement process. Don’t take our word for it, read what is posted on the NHTSA website.

Here is the exact wording placed in the official CARS website, http://cars.gov:

“While the CARS Act makes transactions on and after July 1 potentially eligible for credits under the CARS program, interested dealers and consumers may want to wait until all of the detailed issues that must be addressed in the implementing regulations are resolved and the final rule is issued. Issuance will occur around July 23.

At that point, NHTSA will have in place detailed provisions about establishing eligibility and a system to ensure the prompt payment of money for credits used under the CARS program.

If dealer choose to structure a transaction before the final rule is issued, they will bear the risks associated with later demonstrating that the transaction meets all of the specifications of the final rule. The dealers should also give the credit to the consumer at the time of such transaction.

The dealer would be reimbursed by NHTSA later if the dealer registers and submits documentation sufficient to demonstrate that the transaction was an eligible one, that the traded in vehicle was properly disposed of, and that all requirements in the final rule were met.”

This is an excerpt from a PDF document on the official CARS website.

New Administrative Headaches For Car Dealers

Car dealers will benefit from the CARS program but they will also have many new headaches to deal with. It would seem unlikely that car dealers will stick their neck out and sell cars starting July 1st without knowing all the rules. Here are just a few new issues that the CARS program will hand dealers:

• Compliance training to ensure that all papwerwork is collected from consumer.
• Dealing with trade-ins that are not listed on http://fueleconomy.gov.
• Storage of clunkers until payment is received, which could be up to 10 days.
• Security to keep the “clunkers” from being vandalized.
• Cashflow delays. The government will review each transaction and payment delays can be expected.
• Dealing with transactions that the government does not approve.