Government Rejects Some Rebates that Didn’t Meet Cash for Clunkers’ Rules

We are on the front edge of learning just how many deals did not go through in the federal government’s “cash for clunkers” program.

Currently, less than 20 percent of the outstanding rebate applications have been processed. The government is expected to process all of them by the end of the month.

When the federal government rejects a rebate application, the car dealership may lose up to $4,500. Will dealers try to return to the consumer for the money?

Technically, dealers bear the burden for ensuring that older, lower-mileage clunkers meet federal guidelines before letting consumers trade them in for more fuel-efficient vehicles.

USA Today reported on some of the reasons why vehicle trade-ins were rejected from the rebate program:

“Under the rules for cash for clunkers — which offered up to $4,500 to trade an older, low-mileage clunker for a new, higher-mileage vehicle — buyers must have owned the clunker and had it insured and registered for the past year. Many deals have been kicked back because of a late insurance or registration payment in the year.

” ‘The issue is that the regulations that were written were incredibly cumbersome,’ says Jeremy Anwyl, CEO of Edmunds.com. ‘There are cases where people unequivocally lived up to the law, but they are having a hard time living up to the regulations.’

“Anwyl says a Hyundai dealer told him about a rebate application rejected over a registration technicality: The buyer had registered the car for the past year but hadn’t renewed its California smog certificate, so the state considered the registration late.

“The dealer has had three deals rejected on such technicalities of the 53 reviewed so far, Anwyl says. He has another 277 clunker deals pending.”

The Financial Post reported that the Canadian government recently rejected a proposal from the auto industry to develop a U.S.-style clunkers program in Canada.

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