News - Cash For Clunkers' Effect on Honda Dealerships

In the midst of all the consumer assistance from the government with the Cash for Clunkers program, it seems that its immediate detriment to the dealership is felt a little stronger than first thought. Honda dealerships are reaching out to the financial arm of the corporation for a loan themselves to give them some cash flow due to the time that it takes the government to issue moneys owed to the dealership. According to a source at Honda, who wished to remain anonymous, “It’s difficult to work through all of our figures since we can’t take into account the money we should have but don’t. It makes it difficult to figure out what kind of stock we can bring back in, when we’re not sure when we’ll be in the proper financial location that we should be in.” When asked how long it took to receive payment for a Cash for Clunkers deal, he replied “The last one we received I believe took about a month and a half from the day we sent the proper forms.”

Honda has seen a significant spike in its automobile sales since the inception of the Cash for cluners program and even a larger spike since President Obama signed an extension for the program, but it doesn’t seem to be as much as they need to make their cash flow sheet look appropriate to the amount of sales they’ve made. Honda Financial has shown that they have interest in helping out the dealers to keep their cash flow in the green, so as not to raise red flags that their dealership may not be performing as expected from Honda’s corporate suits. Honda dealers, however, don’t seem to be showing any fear of losing customer’s due to lack of stock, “Honda’s will always sell, because every Honda has something for everyone. They are not a niche car, like many others. Just because we don’t have the perfect one on the lot, doesn’t necessarily mean that will drive the customer away.”