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NHTSA and Citigroup Miscalculated Staffing Needs

Every car dealer in the United States that is participating in the Cash for Clunkers program is asking the same question:

"How long will it take to get paid?"

Unfortunately, after you read this post, the answer is not encouraging unless the NHTSA to working with Citigroup to pull a rabbit out of the staffing hat with or Robert Half International.

Hundreds of consumers have reported that they are still waiting on approvals for transactions that were placed 7, 10 and 14 days ago. This begs the question of whether the NHTSA outsourcing partner, Citigroup, is severely understaffed. So, we started to do some investigation and some practical math and the answers we came up with are alarming.

Citigroup CARS Workers
How Many Worker Bees Are in the Citigroup CARS Hive?

Last week the News Tribune quoted NHTSA CARS spokesperson Rae Tyson that Citigroup recently upgraded their staffing form 100 to 300 persons. Here is the exact text from the article written by Dana Hedgepeth:
"Ray Tyson, spokesman for the NHTSA, said Citigroup, which contracted to help process transactions from dealerships, has beefed up its staff to 300 employees on the clunker program from 100"

Holy Understaffing Batman

Let's do the Cash for Clunkers sales processing math. We need to discuss two scenarios; Scenario #1 is the number of applications submitted to date and the second will be the applications submitted by the Labor Day Weekend that could represent the entire $3 billion in funding.
Scenario #1 - Let's assume that 300,000 sales have been made to date which is consistent with the NHTSA saying that the initial $1 billion was gone a week ago.

pow-175pxStaffing: Now let's assume that a full-time Citigroup worker who has an eight hour shift gets 30 minutes for lunch and two 15 minute breaks. In a PERFECT world that leaves 7 hours a day for uninterupted time for reviewing CARS sales applications. Since there are many pages that are faxed into the NHTSA for every sale, let's assume once again that this clerk can inspect, review and approve a completed compliant application in 15 minutes.

That means that this clerk can process (7x4) 28 approved applications a day. Let's add in that they can also reject a dozen applications (about 50%) that are incomplete for any reason.

Weekly Processing Per Person: In one week, a full time CARS sales processing clerk can review and approve (5x24) 120 completed and valid applications. The 120 completed applications/week is very important number. We'll even give the Citigroup clerks the benefit of being more efficient later, just hear us out.

Where are We Today: Let's say we have 300,000 CARS sales completed today; some have been submitted and some are still trying to be submitted. The NHTSA CARS sales processing started on July 27th with 100 people and on or about August 2nd the staffing was increased to 300 people.

Sample CARS Math Question: How can you process 300,000 applications is 10 days:

One person can process 24 applications a day or 240 in 10 days. If you take 300,000 / 240 = 1,250 full time staff needed.

If there are only 300 full time staff members, that would mean that dealers will be waiting up to a month or longer to get paid.

If the clerks could process more than 24 applications a day, assume 30 applications a day, dealers would still be out at least 21 days.

Most car dealers do not have the cash flow to last 3-4 weeks.

What Happens on Labor Day Weekend?

past-due-200pxWe predict that by Labor Day weekend the full $3 billion will be used up meaning that approximately 700,000 car sales will have been made. If you add this sudden influx of sales over the next 3 weeks to the existing backlog, CitiGroup would need to train and hire over 2,000 employees to make sure car dealer got paid in a timely fashion.
Is anyone else doing this math?

Is anyone else scared that dealers will be paid much later than promised?

Views: 28

Tags: cash, citigroup, clunkers, for, nhtsa


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Comment by Finney on August 13, 2009 at 7:40am
The media only seems to be focus on the people getting the deals not the dealers side of the issue. I would think NADA should be all over the lack of staff and payments to the dealer. I checked NADAs website after I got the email this morning and all they have is some article bragging about the fact they help get the CARS program into law. That's great but it is time to move on and help the dealers see the benefits fo this program - PAYMENT! The situation is getting worse for the dealers - not better.
Comment by Brian Pasch on August 13, 2009 at 6:28am
They need 3,000 workers to get this done...I spoke with a dealer yesterday that started entering payments DAY ONE and now has 200 deals submitted and not one payment. It's amazing that the media is not picking up on this story and I wonder what pressure NADA is putting on the NHTSA...
Comment by Finney on August 13, 2009 at 6:23am
Nada regulatory Affairs release an email today stating that NHTSA has 225 employees processing reimbursement claims. I wonder is this in addition to the staffing from Citigroup or is this the total number period? If so, will dealer ever see thier money? I find it hard to believe anyone would have thought 225 staff could pay out the money in 10 days even if it was only 1 billion dollars....
Comment by Finney on August 11, 2009 at 5:58pm
It was a Automotive news article my GM gave me. Don't have the link handy but it stated they tripled the staff so was that from 100 to 300 or 300 to 900? Not sure.
Comment by Brian Pasch on August 10, 2009 at 8:39pm
No official word. I directly asked the NHTSA how many people are working on approving the applications and I could not get an answer from them. One week ago they said they went from 100 to 300. Are you saying that someone said that they went to 900? Do you have a link to that story?
Comment by Finney on August 10, 2009 at 8:36pm
I read today that they triple the 300 hundred staff.... Still not enough but better. Hey is there any official word that this will end on labor day weekend. I don't think the money can last much longer than that. However, there doesn't seem to be any official plan for the if the money gets low again...

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