Cash for Clunkers revs up auto sales

First Posted: 8/4/2009

The governments cash for clunkers offer recently has sped up sales for Mount Airy car dealerships, which are hoping officials approve additional funds this week to fuel the program through early fall.
Oh Lord, its been tremendous tremendous! Jeff Jessup, sales manager of Scenic Ford, said Tuesday of the incentive effort in which customers can receive up to $4,500 in trade-in value for qualifying low-mileage vehicles when they buy new fuel-efficient models.
Similar positive reports about the program came from other dealerships in Mount Airy Tuesday.
We did 12 vehicles on Friday, I think, said Paul Patterson, co-owner of Patterson-Collins Chevrolet, which is part of a local operation that also includes other General Motors brands. Its been very successful.
This has really been a shot in the arm, agreed Allen Burton of Patterson Chrysler-Dodge-Jeep. I mean, it has really increased our business. Its a great deal for the consumer, its not so much us its a true consumer-oriented program.
The cash for clunkers rebate offer, part of the general Automotive Stimulus package adopted by Congress, is aimed at getting gas-guzzling vehicles off the road and boosting auto sales that fell significantly.
Jessup said people have traded in Ford Explorers, Chevrolet Suburbans and other large SUVs at Scenic Ford in response to the car-purchase program, for which the U.S. Senate is considering approving $2 billion more this week to ensure its continuation.
Its been better than the governments expectations, said Steve Stanley, finance director at Simmons Nissan, who also is involved with sales management. Its generated a lot of showroom traffic.
That was especially the case last week, when it was announced that the initial $1 billion allocated for the rebates was expected to be exhausted by midnight Thursday. That sent many would-be buyers scurrying to dealerships to take advantage of the deal, thinking it might end.
All the money was spent in the first two weeks, Burton said.
The extra $2 billion was approved by the U.S. House last Friday, ahead of the Senate weighing in on the funding proposal this week, which has kept customers coming in hopes of cashing in on the rebates.
It would be absolute suicide for them not to pass it, Burton said of senators.
Officials of local dealerships contacted said their sales had increased by 40 percent or higher as a result of the cash for clunkers rebates.
Customers, meanwhile, are benefiting from savings from the program as well as exchanging vehicles getting 18 miles per gallon or lower for new ones offering at least 22 miles to the gallon.
Weve had people whove been able to purchase cars, in some cases, for half-price, Burton said. He added that customers are guaranteed $3,500, with around half qualifying for the maximum $4,500.
In addition to meeting the mileage qualifications, vehicles that are traded in under the cash for clunkers program must have been continuously insured and registered for the past year.
Inventory Strained
The funding uncertainty for the program in Washington has many local auto dealers closely monitoring activities in the Senate so they can plan for the next couple of months accordingly. In the meantime, some are putting the brakes on the offer somewhat, to ensure that funding for the vehicles they process actually will be there.
Were in limbo as we speak, said Stanley, the Simmons Nissan official, explaining Tuesday that the dealership was selling new vehicles under the program with certain conditions. If all necessary paperwork is processed and if the government OKs the money, then the customer will be able to take possession of a car, he said.
Jessup said Scenic Ford officials also are somewhat skeptical about the funding at this point. Were waiting on the senators.
In addition to the funding issue, dealers cited other negatives Tuesday concerning the cash for clunkers program.
The situation right now is we dont have any inventory, said Jessup of Scenic Ford, who added that the popularity of the rebate offer has greatly lessened the dealerships available stock. The sales manager said that situation will be alleviated I hope within the next 30 days.
This concern was shared by Burton of Patterson Chrysler-Dodge-Jeep. Thats going to be the problem, he said of the inventory availability. The sales manager pointed out that Chrysler shut down plants months ago which have been back up and running for only about two weeks. He said this will strain inventories until late this month or the first of September.
Its always something, Burton mused. Theyve got the inventory, you dont have the customers. You have the customers, but you dont have the inventory.
Another roadblock with the program is the accompanying governmental forms, which are processed online at a special Web site.
The paperwork is terrible, said Burton. Its probably going to take a minimum of an hour per deal to get the paperwork submitted.
Its like 20-some pages, Patterson said.
Yesterday I did one, said Stanley of Simmons Nissan, and everything went pretty smoothly. But it takes at least 72 hours to get approval for the refund.
And mistakes can lead to a rebate being rejected.
And what about those clunkers that dealerships receive?
Under the program, dealers are obligated to destroy the engines of qualifying vehicles using sodium silicate, which causes the motors to seize up; then the disabled vehicles are demolished.
All these cars that we trade for are going to the crushers, said Burton.
So theyll never be back on the roads again.
Contact Tom Joyce at [email protected] or at 719-1924.

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