The finance arms for American Honda Motor Co. and Toyota Motor Sales U.S.A. Inc., as well as select other lenders, are providing financial assistance to dealers struggling with cash-flow problems created by the federal cash-for-clunkers program.
Dealers submit their requests to the government for $3,500 or $4,500 rebates electronically. Under the program, they are supposed to receive payment in 10 days. But since the program’s July 24 launch, dealers have only received payment for a small percentage of the processed voucher requests.
American Honda Financial Services and Toyota Financial Services said today they are providing relief to the dealers with credit lines for their new-vehicle inventory.
Toyota Financial Services automatically pre-approves dealers in good standing for a wholesale line of credit to be used exclusively to finance the clunker rebate amount.
American Honda Financial Services allows dealers to deduct the amount of the rebate when the dealer pays off the inventory loan on a vehicle. Though lenders typically give dealers three to seven days to pay off the inventory loan, Honda Financial is giving dealers an extra 20 days from the date the dealer submits a request to the government for the rebate check. The program began Wednesday.
“Dealers aren’t being paid on a daily basis for the clunker submissions, so we’re giving them extra time to make the deal work,” said Chris Martin, a Honda spokesman.
Ford’s used-car support
Ford Motor Credit is taking a different approach, says spokeswoman Meredith Libbey. It is working with qualifying dealerships that it floorplans to provide additional used-vehicle financing on a temporary basis to help ease the cash-flow crunch.
Comerica Bank, a large provider of inventory financing for dealerships, has no formal program, but it is trying to flexible with its dealers caught in the cash crunch. The dealer can deduct the amount of the rebate when it pays off the inventory and complete the payment when reimbursed by the government, said Joe Moran, senior vice president in Comerica’s dealer services group.
“We understand they may require some liquidity and support,” said Moran. “We’re working with our dealers.”
David Wilson, president of David Wilson Automotive Group in Orange, Calif., said, “We’ve sold nearly 1,100 cars on the program and have been paid for five.”
“I’m out way over $4 million and growing by $200,000 per day,” he said.
Wilson, who owns Toyota and Honda stores, is not taking advantage of the financial assistance because he says his company has plenty of capital. But he hopes the government will set a definite end date for the program.
“This stimulus is really working,” said Wilson. “If we could just get paid.”