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NHTSA Urged To Issue Public Statement on CARS Sales Procedures


Consumers are reporting a wide range of dealer specific practices that may violate the Car Allowance Rebate System Final Rule and the language in the Cash for Clunkers Bill. The NHTSA is urged to make a public statement on these varied sales practices.

The Pasch Consulting Group, who created the popular Cash for Clunker Facts website, is reporting that consumers are writing on their blog to say that car dealers are not allowing them to take their new cars off the lot when they submit their qualified clunker and all required paperwork.

These irate consumers claim that dealers are holding their new car hostage and transferring the burden of liability for the CARS transaction to the consumer.

Consumers reporting on tell stories of how dealers are requiring them to sign paperwork which makes the buyer assume 100% of the liability of the CARS rebate if the transaction is not approved.

Dealers are reportedly also completing CARS transactions and telling consumers to drive home in their clunker until the transaction is approved. These and other consumer experiences can be viewed on the SPEAK UP forum on the popular consumer website

Dealer Justifications

Some of the possible reasons given for these practices include:

1. Dealers who allow consumers to take the car off the lot have to make a payment to their financing floor plan normally with 3-5 days. If dealers are tight for cash, the practice of holding delivery of their new car may be their way of pushing off payments until they get paid from the NHTSA. Dealers have hundreds of thousands of dollars tied up in payments owed to them by the NHTSA.

2. Dealers who are backed up or who are having problems entering in sales are wary and concerned when and if they will get paid. To make themselves feel better about the CARS rules they have created a fall back plan that places the burden on the consumer. They have created documents requiring consumers to pay back the rebate and/or return the car. (This is money the consumers never had in the first place and the reason they participated in the program.)

3. Dealers who are allowing consumers to drive home with the clunker may be tight for storage space since the car does not have to be disabled now until the transaction is approved. This is a variation of reason number two which is an attempt to pacify the consumer that they still have a car to drive while the government approval process takes place.

The CARS program is the first time dealers have had to deal with a program like this, so they are as concerned as anyone that the system will eventually work and they will get paid.

One dealer surveyed by the Pasch Consulting Group stated that the only form that he requires consumers to sign is one that states that if they have lied or misrepresented any information they submitted, that they can unwind the deal. That seems fair.

We Urge the NHTSA To Speak Up

All of these “practical” reasons for protecting dealers may violate the rules in the bill and the document called the Final Rule. These tactics seem to place the burden on the consumer which is not what many consumers interpret from the program rules and procedures.

Consumers are urging the NHTSA to come out with a public statement that addresses these practices.

One dealer told us “If a dealer cannot afford to play by the rules because of cash flow, storage space or manpower, they should not start the sale and take in a Cash for Clunkers qualifying vehicle. ”
Many dealers interviewed by the Pasch Consulting Group today have confirmed that if a consumer’s paperwork is all in order, they will leave the lot with their brand new car.

This is what many consumers believe the NHTSA and Congress intended. The Pasch Consulting Group, on behalf of consumers around the country, hope that the NHTSA will address this matter publicly in the near future.


 cash for clunkers
 Car Allowance Rebate
 Pasch Consulting Group
 car dealers sales

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