LaHood: Car dealers will 'get their money'

WASHINGTON -- Transportation Secretary Ray LaHood assured car dealers Wednesday that they will be reimbursed for the popular cash for clunkers program, responding to complaints over a backlog of rebate payments.

"I know dealers are frustrated. They're going to get their money," LaHood told reporters. He said the Obama administration would soon announce how much longer the $3 billion car incentive program will last.

Some car dealers have said their reimbursement requests have not been approved, leading to a cash crunch at their businesses. Dealers typically borrow money to put new cars on their lots and must repay lenders within a few days of a sale.

LaHood's announcement did not matter to some members of the Greater New York Automobile Dealers Association, which said half its 425 members have stopped offering rebates from the program because they can no longer afford them.

Association President Mark Schienberg said Wednesday that the group's dealers have been repaid for only about 2% of the clunkers deals they've made, leaving many short on cash.

Through Tuesday, auto dealers have made deals worth $1.72 billion and are on pace to exhaust the program's funding in early September. The program offers car buyers rebates of $3,500 or $4,500 for trading in older vehicles for new, more fuel-efficient models and has generated more than 400,000 vehicle sales.

The Transportation Department said earlier this week it was tripling its workforce to handle the rebates and expected to have 1,100 workers dealing with the paperwork by the end of the week.

The online reimbursement system was flooded with reimbursement requests shortly after the program began in late July, overwhelming the computer system and staff set up to process the deals. That led to big delays for dealers trying to file the paperwork they needed to get paid back for the rebates.

LaHood said some of the submitted paperwork has been incomplete or inaccurate, leading to delays. He acknowledged the department did not have enough people to process the paperwork but that DOT was ramping up staff levels to meet the demand.