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.