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 Monster.com 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.
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.
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?
We 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?