Minnesota megadealer Paul Walser has done about 800 clunker deals and knows he risks a lot of his cash with each additional day he participates in the program.
Every day we meet in the morning and ask ourselves, Do we want to keep delivering, said the CEO of Walser Automotive Group in Bloomington, Minn. We are just moving forward and crossing our fingers well be OK.
Weve been kind of sticking our neck out on this because theres still some uncertainty on the funding and our payout.
Walser, who owns 10 stores with a variety of domestic and import franchises, said his business is well-capitalized. But he added that the clunker program certainly has sucked up a lot of cash.
And with inventory running low and no cash yet from the federal government, its become a day-to-day decision whether Walser continues in the program.
So far, he has decided to stick with it. But to help protect himself, Walser has asked clunker customers to sign an understanding. They have to agree that if Walser does not get the government cash for their clunker, the customer will either pay that money or return the new vehicle that had been purchased.
He said he knows of other dealers who have stopped delivering vehicles under the clunker program until the government money arrives.
If this were to go on for a period of time, then theres only so much we can bankroll, Walser said. We run the risk that we get some cars back with miles on it and some very unhappy people.
Another concern for Walser is inventory. Across his 10 locations, Walser started with about a 75-day supply of vehicles in early July. Now he estimates his days supply averages in the 20s for all his stores.
For example, in July, Walser sold 350 Toyotas and now has just 130 left.
Weve got some product coming, Walser said. Whether it gets here fast enough to qualify for any part of this program is questionable, maybe unlikely. Assuming they pass the extra $2 billion [in clunker funding], were already well into that inventory already.
Despite the concerns, Walser favors more funding to maintain the program.
Said Walser: It has attracted customers who thought they were clunker customers and found they werent -- but they ended up buying a new car anyway.