On the final day of the Cash for Clunkers program, thousands of car dealers are frantically trying to get in all their past sales as well as sales from over the weekend. Dealers are required to enter in all sales by today at 8:00 pm but with this outage, the NHTSA will have to grant an extension. Here is the message one dealer sent to us when he was trying to enter in sales:

"To better meet the high demand we're experiencing, we have temporarily shut down the service so we can expand our capacity to more quickly serve your requests. Please visit the site at a later time. We apologize for any inconvenience."

The NHTSA website obviously could not handle the load and has been temporarily shutdown. This is not the first time the the NHTSA has experienced server load issues. When the program went live on July 27, 2009 the web servers were frequently rebooting dealers off during registrations.

Over $3 Billion In Cash for Clunkers Sales

It looks like the NHTSA information technology planners underestimated once again the popularity of the program and how many deals are still not entered into the NHTSA system. I predict that when the dust settles, the car sales completed under the CARS program will exceed the $3 billion dollars allotted for the program.

GM dealers received some good news today as GM corporate headquarters issued a press release on their website that solves some immediate problems dealers are facing from the NHTSA's failed CARS reimbursement system. I give GM kudos for giving their dealer network some financial relief.  Let's see who else will step up and assist their dealer networks. Consumers and dealers have said that the manufacturers benefited the most from the Cash for Clunkers program and that local dealers had to bear the costs of operating the program.   GM's decision is most likely driven foreknowledge that the NHTSA will take weeks to get caught up with their backlog of reimbursements. I calculate that the NHTSA would need over 2,000 workers to get the job done in a timely fashion. This week the NHTSA promised to ramp from 300 to 1,000 workers but that is too little too late and that's why GM had to step up to the plate.  That's how I am interpreting this news today.

GM Cash for Clunkers Advance Payment

Here is the text of the official GM press release:

In order to meet high customer demand for new fuel-efficient GM cars, crossovers and trucks under the Federal CARS (Cash for Clunkers) Program, the company will today begin providing cash advances to dealers which are equivalent to the amount of federal rebates which are being processed for that dealership's qualifying new vehicle sales. As a result, dealers will have the liquidity to run their businesses effectively in the midst of this extremely successful program, and to continue immediately delivering new vehicles to GM customers. "Our sales performance in the past two months has exceeded our internal forecast by over 60,000 vehicles, largely driven by the CARS stimulus program," said Mark LaNeve, VP of U.S. Sales. "We want to do all we can to provide customers with timely new vehicle deliveries and dealers the liquidity they need to run their businesses. This will continue the sales momentum of our new fuel-efficient vehicles such as the Chevrolet Cobalt, Equinox and Buick Enclave." GM intends to provide these advances for qualifying new vehicle sales already transacted under the CARS program, and will provide advances going forward as long as the CARS program is in effect.

An Open Letter to Americans:

The Cash for Clunkers program has provided an important lesson that Congress must take to heart at this time when other sweeping measures such as national healthcare reform are being considered. The concept of creating a stimulus package for the automotive industry had its share of detractors, but the measure was passed by Congress and was signed into law on June 24, 2009. The law empowered the National Highway Transportation Safety Administration (NHTSA) to create the Car Allowance Rebate System (CARS) to administer the stimulus money. The NHTSA website provides a copy of the law which includes this statement:

“The (NHTSA) Secretary shall promulgate final regulations to implement the Program not later than 30 days after the date of the enactment of this Act.”

The law also requires the NHTSA Secretary to set up an Internet website not later than 30 days to support the needs of consumers and dealers. I am deeply concerned about the wisdom and choice of Congress to mandate a 30 day window to implement a completely new national program that required the voluntary participation of over 20,000 car dealers in all US states and territories. Americans need to understand the impact of legislators rushing to meet a perceived need without taking the time to consider implementation timelines. On July 24, 2009, The Final Rule document was released by the NHTSA and delivered exactly 30 days after the enactment of the bill.   The NHTSA advised dealers that they could register for the program three days later on Monday July 27, 2009. Once the dealers’ registration information was entered and confirmed, they could start entering sales for reimbursement.  Monday was also the day that the wheels fell off the CARS “cart”. The NHTSA website had no time to be stress tested.  It could not handle the thousands of dealers registering simultaneously.  This resulted in weeks of dealer registration delays, further complicated by letters improperly mailed from the NHTSA to dealers with wrong dealer registration codes. The NHTSA website also could not handle the volume of sales transactions being uploaded for reimbursement.  Car dealers were forced to spend hours to enter a single sales transaction. Dealers had to require their staff to work through the night to enter sales when website traffic was lower.  The failures of the NHTSA website decreased dealer confidence in the program and raised concerns about the reimbursement process and payment timelines. NHTSA reported that when dealers were able to upload sales documents, 80% were rejected as incomplete.  The high rejection rate confirms that the NHTSA could not properly train dealers in the time allotted by Congress. The NHTSA initially chose to hire 100 employees to review sales applications; a few days later they tripled that number.  In the first official week of the CARS program over 200,000 sales were made which would give every employee about 7,000 cases to inspect, review and approve. Dealers under the law are entitled to be paid in 10 days after their sales transactions are approved.  This workload from the initial $1 billion in funding alone would take over a month for staffers to review and approve dealer submission.  Imagine the backlog at the NHTSA when you consider that over 600,000 qualifying CARS sales are likely to be completed by this time. Dealers now have hundreds of thousands of dollars tied up in CARS reimbursements and only a small percentage has been repaid. The implementation compelled some dealers to create sales contingency contracts to protect themselves from unintended financial losses. This has infuriated consumers; a practice recently denounced by the NHTSA.  Dealers must now brace for thousands of lawsuits claiming that they haved violated program rules and NHTSA guidelines. This well intended government stimulus program was rushed to market. Consumer confidence that our government can enact fast tracked national reforms has been damaged. NHTSA Secretary Raymond LaHood should have spoken up and demanded that the 30-day startup clause be removed. The fact that the NHTSA was unable to remove this language is the lesson that we must take away from the Cash for Clunkers implementation chaos. Was one of our top government agencies, entrusted with billions of dollars, ignorant of the real life requirements of a program that must work cooperatively with the private sector, or was its voice silenced by political expediencies?  Did the automotive lobby have that much influence on Congress to push such an unrealistic start-up schedule? The potential answers are frightening. I hope that the clear lessons learned from the Cash for Clunkers program are at the forefront of the minds of the legislators who are eager for fast track changes in our healthcare system. Pasch Consulting Group Creators of www.cashforclunkersfacts.com brian@paschconsulting.com http://twitter.com/cashclunkers

One of the unexpected consequences of the Cash for Clunkers program is that car dealers are so busy that they are unable to handle the leads from third party lead generation services.  A few months back dealers could not get enough leads to drive sales to their bottom line. One of the largest automotive lead providers responding to our inquiry why our lead sales were down responded that car dealers have cut back on buying leads in August. From our estimates dealers have cut back anywhere from 25-40% of their normal lead spending.  Have you done the same?

Thousands Of Leads Torched a Day

For example, our Cash for Clunkers website has over 800 leads a day that can not be placed with new car dealers. Imagine the thousands of leads generated by Edmunds.com, Motortrend.com and other popular lead generation websites each day. All of these leads will become stagnant and cannot be resold under normal contract terms which dictates that leads have to be send to dealers within 30 minutes of being entered into a website form. It seems that car dealers are flooded with calls and walk-ins that are interested in buying a car under the Cash for Clunkers program and they don't need extra leads. I can understand the rationale especially if the dealer is running low on inventory but I would say that turning away leads may not be in their best interest.

September Sales Projections

Not all third party leads result in an immediate sale. Leads that arrive from 3rd parties can represent consumers in the beginning of the sales cycle or at the end of the cycle. If the CARS program has awakened the consumer to action, it won't last for very long. We predict that the total $3 billion will be used up by Labor Day weekend. Cutting back on lead purchases now may be a result of dealers being exhausted with all the additional paperwork generated from the Cash for Clunkers program. But in a few weeks that will be gone and dealers who turn away new leads in August will be creating a sales gap in their September and October pipeline.

Automotive Support Sales May Take a Hit

I also imagine that automotive sales support services may be having a tough time getting new clients in August. Sales professional calling up a dealership in August to sell them a new tool to convert more sales, increase visitor time on  their website, or to drive more traffic to their website will most likely be told to call back at the end of September. So its a good time to be selling cars after a horrible past 12 months and probably rough times for the support industry. Dealers will have to think of new ways to continue the "good times" this fall is Congress does not inject more money into the Cash for Clunkers program. That would mean getting back to the basics. Interesting times indeed.

I have been blessed to have dozens of car dealers and consumers keeping me informed on what is happening on the Cash for Clunkers front lines.  Yesterday our website, www.cashforclunkersfacts.com had over 120,000 unique visitors and over 300, 000 page views.  This has been one Automotive SEO story for the ages. Dealers across the country are frustrated.  The gripes pertain to the buggy CARS sales submission process and the lack of approved sales to give them assurances of being repaid.  If you have been having similar issues, please share your experience by posting a comment to add some community spirt and support for dealers who are stressed out. One dealer emailed me yesterday to say that they still do not have a valid NHTSA login to enter their 40+ CARS sales. Dealers are stressed about floating hundreds of thousands of dollars with not one sale confirmed or repaid. A new cottage industry could start with plenty of takers: Cash For Clunkers Stress Management Classes. In truth, it's not a laughing matter to car dealers who were already struggling with cash-flow due to slowing sales.

No Sign of Hope Yet

Will the NHTSA will get caught up this week and give dealers a reason to continue taking new CARS sales?  I doubt it. If the NHTSA processing backup continues to delay confirmations much longer, dealers will have no choice but to stop accepting new CARS transactions. Only a handful of the most well funded car dealers can float millions without concern. Consumers are also frustrated looking for a update on their submitted sale . Dealers have nothing to comfort them with because they are equally in the dark. (which reminds me of a mushroom story) There are many stories we could share which puts in words the stress level of your peers.   I picked this one that came in during the past hour: August 4th at 7:30 pm:

Just a heads up – I have talked to 3 other dealers – and no one has got paid $1 dollar yet. I have over $300,000 outstanding in CARS rebates and have been rejected 10 times so far. Some of them have been small mistakes on my end, and some make no sense to me. Here is a response (in green) to one of my cars that got rejected and the reason for it: The voucher you have submitted with invoice number XXXX has been rejected for the following reason: Please recheck your entire transaction, you may have other errors that will further delay your payment.. The voucher can be resubmitted if the reason for rejection can be corrected. Please see http://www.cars.gov/dealersupport for more information about the CARS program requirements. Please contact the CARS Help Desk at (866)-CAR-7891 for further assistance. Seriously? Not one reason why it was rejected! I have to HOPE that I get it right when I resubmit…. I am truly happy for the traffic that the CARS program has brought, but the paper work NIGHTMARE is beyond ridiculous. I believe I will get paid on these, but in the meantime, I am literally having to “float” $300,000. Not a good thing….

$2 Billion Cash for Clunkers Funding This Week

The Cash for Clunkers program $2 billion funding bill looks more promising today as some Senators have softened their objections to the additional funding. Car dealers like the one in this post would be put in a very difficult place if additional funding was not approved. Cooler heads look like they are starting to understand just how underfunded and oversubscribed the CARS program is and will approve another $2 billion this week. We do not have a date certain when the measure will be taken up in the Senate but it has to be before they break for summer recess in Friday. Follow us on Twitter for daily real-time updates at http://twitter.com/cashclunkers or add your name to our email list in the upper left corner of this page.

There are many benefits of being a member of DrivingSales.com and today there is a new one.

For dealers that are looking to sell more cars under the Cash for Clunkers program, we are offering on a first come basis, consumer leads for the Cash for Clunkers program.

These consumers have requested a local dealer to contact them about purchasing a new car under the program.

These leads have not been picked up by our dealer lead network and rather than let the leads "rot' we would love to see consumers helped by a local dealer.

So I have posted a PDF list of approximate leads by state, city and brand. The leads will only be given to a dealer contact that is in the city on the list and that is a franchise representative. The dealers taking the leads must agree to follow-up the leads at their store and not to resell the leads to anyone.

If you are interested, send an email to brian@paschconsulting.com with your name, dealer address and website link.

Something like this with a SUBJECT LINE: ADM LEADS OFFER

Joe Smith
Smith Toyota
Miami Florida
www.smithtoyota.com
Excel Format: No
XML Format: Yes - Send XML Leads directly to: crmleads@smithtoyota.com

We will send the leads to you in an excel spreadsheet or we can also send them in XML format to your CRM system. If you want them emailed to your CRM system, I will need that email address.

We will have the date on the lead so you can work the newest ones first' since some may have purchased cars since no one responded to them in real-time.

You can download the list at http://www.paschconsulting.com/cfc-leads.pdf

Best wishes..our Cash for Clunkers website is rockin...over 300,000 page views yesterday.

No brokers please, just DrivingSales.com members working at a specific dealership location.

Since additional funding looks to keep the CFC program running through August, its time to gear up and have a great sales month. These leads will help to enhance your existing efforts.

P.S. Since this is served on a first come basis, please understand if your area was already taken by another member or someone that we emailed this morning.

We are now advised that the CARS program may go on hold. Our prediction on Tuesday 7/28 that CARS funding could be used up by August 1st was very accurate. Some in Washington are is concerned that there may already be enough CARS sales completed to use up the initial funding. Consumers now have a reason to sing along with Connor Pasch as he sings the Cash for Clunker Blues. Watch Video Now At 11:40 PM EST the Associated Press said that the program was not suspended and that the White House and DOT are reviewing their options. The NHTSA website has not updates as of 11:40 pm so the program is still on. Read News According to various press reports, legislators are meeting to decide how to handle the situation. I guess when we reported all week that dealers could not get these trades into the NHTSA system finally hit home. Just two days ago, the NHTSA spokesperson was asked about monies running out quickly and he said "I think it's an unfounded concern, It looks to me like we have a long ways to go." Translation: 48 hours is a long time in Washington.

We Did The Math

We have been warning consumers to act quickly since funding would go fast. Many laughed and accused us of creating "a run on the bank" when we predicted funding would be gone by August 1st. Who is laughing now. No One. We have been saying that the NHTSA’s dealer sales enter system was backed up. We told people that the NHTSA website continually boots car dealers off the site during the input process forcing them to start over. We reported that at best it takes 1.5 hours to enter a single transaction in the NHTSA sales system. We said that from our survey over 60% of CARS sales have still not been booked. We pointed out that it would be impossible to “gauge” sales with a broken input system. (view dealer survey on 7/28) There are dealers representing thousands of sales that have yet to enter a car sale for approval. We documented today about the growing frustration of consumers and dealers. Tensions are high. It looks like someone else is doing that math in Washington. It would seem that the NHTSA would like to get caught up and then take a deep breath and see how many sales are really done before opening up the program for more sales.

No Need to Panic

Consumers and dealers should not panic. This can go many ways but the sales that have been completed and that qualify will be honored. What is unknown is if additional funding will be granted by Congress. The NHTSA probably needs 1-2 weeks to get all sales caught up and then the CARS program will resume. Hopefully when it resumes, it will have additional funding. If no additional funding were granted, car dealers would suffer a big blow as they have geared up advertising, staffing, compliance and training for a 5 day program that dissolved. The automotive industry can not handle another death blow.

Dealers and consumers from around the country are using a new four letter word: CARS.

Imagine this round on Jeopardy:

"Alex, I'll take Government Programs for $400." Joe Consumer asks confidently

Alex Answers "The most disorganized government program ever thrown on cars dealers or consumers"

Joe hits the buzzer "What is the Car Allowance Rebate System - aka CARS".

Read the consumer commentary on our SPEAK-UP forum or comments on our news updates to get an idea of what is happening around the country with the CARS program. One of the most common critiques is a statement to this effect:

"And this is the same government that wants to create laws to run national healthcare?"

Dealers On The Brink of Mutiny

Dealers are overwhelmed, overrun and starting to bail. Yesterday alone we had emails and calls from a dozen dealers that have stopped taking in CARS sales. Their reasons vary but many feel that since the system is so screwed up, they are not confident in getting paid.

Dealers complain that the NHTSA website, needed to enter CARS sales transactions, is difficult at best to use. The system keeps booting them off midway through the data entry process. A reboot that requires them to start all over.

For most car dealerships, they have witnessed staffing cutbacks, steep losses and a reluctant consumer buyer. Now throw on their plate a program that does not yield them any more profit per sale but adds hundreds of dollars of admin costs per sale and financial liability and cash-flow demands.

A program that requires their staff to work through the night to enter in CARS sales transactions since during the day the NHTSA system cannot handle the dealer load. A system that has more paperwork, more liability and more coordination than anything they have ever experienced.

The current state of affairs with the CARS program: it is aggravating more consumers than it is pleasing. These are the same consumers the dealers were hoping to win back into their good favor.

We have included a post from one dealer on our forum commenting on our post that the NHTSA "money gauge" is worthless because of backlog of submitted sales. Our dealer survey yesterday showed that over 60% of CARS sales were still offline.

We believe that the CARS program will run out of money very shortly and will never have enough to last till September, let alone November 1st.

A Dealer Speaks Out

Anyone who thinks that the “panic” is being created by car dealers just trying to have a good July…think again. I am just one dealer, but I talk regularly with dealers who own about 30 dealerships collectively. Trust me. We are SWAMPED! Overrun. Overwhelmed. My Toyota store has 75 deals as of Wednesday. We have 55 submitted to the NHTSA site. We have zero approved.

The reason we have more than 35% submitted is because we have people entering deals until 2:30 am every day.

The 30 dealerships I know have more than 1200 cars sold and are more in the 40% range submitted. If the rest of the country is anywhere close to us it sure seems like a billion will go lightning fast.

I am not saying that there may be a possibility that this will all slow down soon , but PLEASE don’t blame dealers for hyping this. I wouldn’t pay five cents to promote or advertise for customers. I am terrified that I will not get paid the roughly $300,000 I need to collect from Uncle Sam right now.

Come on out to my dealership and watch people who are working 18 hrs a day to process your deals and tell me you think WE are hyping anything. If the money runs out early it is the dealer who will be screwed.

Trust me, they either will add money to this or it will be over soon. Not saying that to get you in the store either. I don’t need any more deals. I need to get paid on the deals I have already done.

Consumers Are Not Happy Either

Since dealers are scared about getting paid or their sales applications being rejected, they are asking consumers to sign waivers that if their CARS transaction is rejected, they are on the hook for the rebate money. Consumers are wary about signing any documents that make them bear the burden of responsibility.

Consumers are also unhappy about the changes to EPA mpg ratings that knocked some of their deals off the table. We were one of the first to report that numbers on fueleconomy.gov were changing.

We also have documented complaints from consumers who have cars that are not listed on the CARS website. We were pleased yesterday to report the story of Don Asay who fought to get his 1997 Jeep Wrangler on the CARS approved list.

There are hundreds of issues that have been brought up in our forums. The tone is far from congratulatory.

Who is To Blame?

Don't blame the NHTSA or the EPA.

Congress handed the NHTSA a bill that required their staff to implement a new national rebate program in 30 days. If anyone knows what goes into planning a national IT infrastructure project that can handle ten of thousands of simultaneous Internet connections; the 30 day requirements was doomed for failure.

It was unrealistic to expect NHTSA lawyers to review a bill and come up with a comprehensive set of rules and guidelines in 30 days. They did a good job but there are so many unanswered questions, the Final Rule is just a final draft.

Our legislators drafted language that created this rush and stress on the automotive retail industry. It would seem that automotive retailers were really not part of the planning when the language of the bill was drafted.

So if Americans are feeling that there is a rush to get a healthcare bill passed...is the CARS program a clear warning that rushing into another unrealistic expectation could spell disaster?

Here are some data entry notes a dealer sent to us to help other dealers who are struggling to enter sales into the CARS system. We also suggest that you follow-us on Twitter as we are giving dealers tips throughout the day as we lean them. http://twitter.com/cashclunkers

One more thing is the programming language utilized for what is probably a UNIX SERVER that hosts the CARS iSupplier Portal and their utilization of an infrequently utilized keyboard key in searching for the Trade-in vehicle and New vehicle descriptions called a “PIPE” which is a vertical line generally located above the “Enter” key or sometimes to the left of the “Backspace” key.

I have attached some graphics to illustrate what I am attempting to explain. Most people never ever utilize this key on their keyboard unless they are a computer programmer or utilize a computer software application that requires this key. Hence, most auto dealer employees will be at a total loss here because in my many years of consulting with auto dealers I have never, ever seen this key utilized for their normal day-to-day work.

You see, the issue is that if one does not make the correct keyboard entry utilizing the “PIPE” when searching, then the vehicle that they are looking for may never appear in their search even if they scroll through all pages because the correct vehicle may never appear otherwise. Our government and Oracle who is probably responsible for the programming failed to consider who was utilizing this application. NOT ENOUGH PLANNING AND OBVIOUSLY NO END-USER INPUT!

Last week we alerted consumers and car dealers that the NHTSA Fuel Economy website was undergoing both a face lift and a data refresh. The end result was that some cars that once qualified for the Car Allowance Rebate System (CARS) were now not eligible while other that were not were now allowed.

The EPA has created a list of the Winners and Losers of the NHTSA Data Update and we have taken the time to create PDF documents of each list for your review.

There are cars that still DO NOT appear in the NHTSA fuel economy website and we have no additional information when the missing cars will be added.

Click on the image below to load the PDF documents: