GM Will Advance Money to Dealers for Slow Clunker Payments

By Brendan Moore


cars-program-logo2GM announced today that they will provide a 30-day line of credit to dealers for the cash for clunkers proceeds owed to those dealers from the federal government.

GM will electronically deposit funds in a dealer’s account that will cover whatever amount the dealer says is owed to them by the federal government under the clunkers program, and the funds will be automatically withdrawn after 30 days. This will give the dealers operating capital for 30 days while the lag in federal payments is shortened.

GM stated the the 30-day line of credit offer will be in effect for as long the clunker program lasts.

Other manufacturers, notably Toyota, VW and Honda, have already quietly provided help to their dealers regarding the lag in clunker funds through various mechanisms. Ford and Chrysler, the other two Detroit automakers, had no comment on the GM plan.

The news from GM comes fresh on the heels of fast-growing dealer concern about the slow payments under the clunker program, and, a public statement by the NADA (National Automobile Dealers Association) that their calculations show that the clunkers program is already out of cash again, based on their surveys of dealers and the amount of pending deals in the sales pipeline. The NADA has publicly warned dealers not to make any more deals under the clunker program because there is a strong risk that the dealer may not be reimbursed for the deal.

The Department of Transportation (DOT) says the agency still has funds available. It should be noted, however, that the NADA’s survey results turned out to be more accurate than the DOT’s projection previously, when the initial %1 billion USD in program funding was depleted almost immediately after program launch. An additional $2 billion was added to the program last week, and was forecast to last until Labor Day, but if the NADA is again correct in their assessment, then that forecast will have been too optimistic.

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Author: Brendan Moore

Brendan Moore is a Principal Consultant with Cedar Point Consulting , a management consulting practice based in the Washington, DC area. He also manages Autosavant Consulting, a separate practice within Cedar Point Consulting. where he advises businesses connected to the auto industry. Cedar Point Consulting can be found at

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  1. It’s a government program. Were you expecting that it would work well?

  2. Since GM is 61% owned by the government, can GM just reimburse all dealers and circumvent the DOT?

  3. yeah, the moeny comes frum us to the guvermint to gm to to the dealers to us in a circel game

  4. Disorganized or not, this program has been a huge success. An unbelievable success. At least this part of the stimulus plan worked.

  5. Now it’s over. Again, and this is it this time. I would have done this program a lot different but that doesn’t matter cause I’m not in charge of spending govt money.

    The same people that got a 6000 dollar tax credit for buying an SUV during the Bush presidency now get a 4500 dollar freebie to make up for their mistake, and the U.S. Govt’s mistake. It’s just crazy.

  6. Lets see, Obama(we) buy GM and pump additional money into GM, then Obama(we) promises to pay GM dealers $4500 for every car sold, then Obama(we) dosn’t pay back dealers on time as promised, so GM, owned by Obama(us) use some of that money provided by Obama(us) to loan to the dealers until Obama(we) pay the dealers the $4500 promised. I am spinning so much my head is about to explode.

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