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G.m. Moves To Ease Dealers’ Clunker Program Woes

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General Motors said Thursday that it would begin advancing dealers the cash that they are owed from the government’s “cash for clunkers†program, after the dealers complained of delays in getting reimbursed for rebates they gave to car buyers.

Some dealers have pulled out of the program, formally called the Car Allowance Rebate System, saying it was costing them too much time and causing cash-flow problems. A dealers’ group in metropolitan New York said about half of its 425 members had stopped participating as of this week.

“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, vice president for United States 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.â€

The program has created a surge in demand since it began July 24, prompting G.M., the Ford Motor Company and Honda to increase production to replenish inventories on dealers’ lots. G.M. said this week that it would run some plants on overtime and call back 1,350 workers so it could build more vehicles.

The program gives a credit of $3,500 or $4,500 to consumers who turn in an older car or truck with poor gas mileage and buy a new, more efficient vehicle. Dealers give their customers the discount, then submit a 13-page application to the Transportation Department for reimbursement.

Only a small fraction of the reimbursement requests have been paid. The Transportation Department is tripling the number of workers processing the forms to ease the backlog.

“I don’t know one dealership that’s gotten paid yet,†said Laura Sodano, a sales manager at Curry Chevrolet in Scarsdale, N.Y. “If they run out, we’re in trouble. It’s bringing us a lot of traffic, but it’s not a very good program.â€

Funding for the program is expected to run out in early September. The National Automobile Dealers Association this week warned that the chances a dealer would get reimbursed could diminish as the program nears an end.

G.M. made the decision to give dealers cash advances late Wednesday, after officials said earlier that the company was “not in a position†to do so. G.M. said it would give dealers the amount they are owed for sales that have already been completed and for all new sales made under the program as long as it remains in effect.

Has GM's bankruptcy problems been fixed already? Where are they going to get the money from? Have they still got a cash pile to burn through?

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