Car Dealers Waiting for Clunkers Money


cash-for-clunkersSince Cash for Clunkers was launched last month it’s been seen as a big success. “We’ve delivered over 100 cars under the program,” said dealer Matt Luzio. But it’s been a complicated process. Luzio’s Flemington, N.J. dealership has only gotten a federal refund for just one of 103 he’s sold.

“It amounts to about a half a million dollars outstanding right now,” Luzio said.

While consumers get a discount when they trade in their clunkers, the cash from the rebates goes to the dealer – as much as $4,500 dollars for each car. And if the government rejects the application, it’s the dealer who is on the hook. So Luzio is holding on to the clunkers in case he needs to sell them like he would any trade-in, reports CBS News correspondent Terrell Brown.

Now, clunkers are piling up, costing him an extra $2,500 a month to store them on a separate lot.

“We are worried if the approval process isn’t sped up, we’ll have to secure more space to store clunkers,” Luzio said.

But new car buyers are still coming in taking new cars off the lot and leaving their clunkers behind. And the car usually ends up in a place like an auto recycler’s junkyard. But even when the car gets here, there’s another issue.

Jerry Cerullo oversees Stadium Auto Wreckers.

“If anyone thinks this is profitable for yards like us, they are 100 percent wrong,” Cerullo said.

He was expecting to make some money on about 30 clunkers this week, but says the dealer delays are hurting his business as well.

“I got a call Monday morning saying, ‘Listen, we’re not ready to do this, we’re going to wait until we get paid,'” Cerullo said.

The government is adding staff – some 1,000 new positions. Luzio hopes that will finally speed up the refunds.

“I’m sure the process will get better,” Luzio said. “We just need it to get better fast.”

Before patience and space runs out.

{CBS Evening News/ Newscenter}