Area dealers say 'cash for clunkers' program is helping

"Clunkers" sit in the lot at Geweke Toyota/Scion on Monday before being towed to a local wrecking yard. Federal law makes it illegal to resell any vehicle that has been traded in under "cash for clunkers." (Jordan Guinn/News-Sentinel)

Area dealers say 'cash for clunkers' program is helping — but a hassle

By Jordan Guinn
News-Sentinel Staff Writer

Tuesday, August 4, 2009 6:13 AM PDT

Comments (4 comment(s))

Perched at his counter overlooking the showroom floor, sales manager Syd Bailey tended to customers streaming in, trying to reap the benefits of the "cash for clunkers" offer at Geweke Ford Mercury in Lodi on Monday.

Despite hassles such as mountainous paperwork and waiting for government reimbursement which may not come, the program has helped move metal in the Lodi and Stockton areas. It's been a burden for salespeople, but business is on the upswing and dealerships in San Joaquin County are meeting with more people kicking tires and looking to jump into a brand-new vehicle.

Bailey, in fact, said roughly a third of all sales in the past week have qualified for the clunkers program.

Although the program officially started July 1, many dealerships did not begin participating in the program until last week. Dealerships across the nation have seen a flood of sales, and many have expressed confusion with the program.

The National Automobile Dealers Association advised its members to consider postponing their participation until the future of the program is sorted out.

Bailey said the most popular vehicles people have purchased are the Ford Fusion Hybrid, the Escape and the Ranger pick-up.

Yet he said the program has been difficult to navigate, especially since the rules have changed several times during the process.

"Last Friday was our first day on the program, and the (official government) Web site was changing during the day," Bailey said. He also said that the dealership has received word that the program is ending and then starting up again.

"It's on and then it's off," Bailey said.

About 'cash for clunkers'

The Car Allowance Rebate System is a program designed to help consumers purchase environmentally-friendly vehicles from participating dealerships when they trade in a less fuel-efficient car or truck. The program was designed to run from July 1 to November 1, but a lack of funds may end it well before then.

The amount of the credit is $3,500 or $4,500, and generally depends on the type of vehicle you purchase and the difference in fuel economy between the purchased vehicle and the trade-in vehicle. Different requirements apply for work trucks.

Customers cannot purchase a used car and get the rebate.

Your current vehicle must be model year 1985 or newer to qualify.

Generally, trade-in vehicles must get 18 or less MPG (some very large pick-up trucks and cargo vans have different requirements).

Trade-in vehicles must be registered and insured continuously for the full year preceding the trade-in.

Source: www.cars.gov

As of Monday, bargain hunters were still coming through the doors of dealerships in Lodi and Stockton in an effort to cash in on the government program before the money dries up.

There has been uncertainty in Washington, D.C. of just how much money, if any, still exists in the program's coffers. President Barack Obama and his administration are trying to add another $2 billion to the incentive. The House approved the funding on Friday, but the bill is still awaiting approval in the Senate.

In his office of Mopar memorabilia, sitting in an office chair fashioned from the seat of a Dodge Viper, Bob Byington, general manager of Stockton Dodge Hyundai, said the hassles have been worthwhile and he hopes more funding will be made available.

He said sales have increased because of the program, but filing the paperwork has been an ordeal. "We can't get the Web site to load the documents," he said.

At his desk next to three spotless Chevy Corvettes, Tom Moser, sales manager at Chase Chevrolet in Stockton, said the dealership is not participating in the program because of the uncertainty and problems associated with it. The program has taken a lot of functioning cars off the road and dealerships can still offer customers deals without signing up for the program. He said the dealership has started employee pricing, where customers can purchase vehicles at the same price as General Motors employees. They are accepting more trade-ins as well.

Moser said since dealerships must wait to be reimbursed for the rebate, he was not wanting to risk being out thousands of dollars if funds ran out or something fell through.

Moser's worries are echoed by Eric Scheper, general sales manager at Chase Chrysler Jeep. Although Chase Chrysler Jeep is participating in the clunkers program and Scheper believes in the concept of it, he said there is much room for improvement and the financial implications are a cause for concern. The $3,500 to $4,500 per vehicle can add up quickly and dealerships could be out tens of thousands of dollars if the program isn't funded properly, he noted.

"One month could sink a dealership," Scheper said.

Scheper is concerned there is no direct communications between dealerships and the government. He also said that the numerous steps to the process complicates things even more. He added that the forms the dealership must fill out and file on the government-run Web site take roughly an hour, but the users have been kicked off after 25 minutes.

Once a qualifying vehicle is purchased and the clunker is passed on to the dealership, the engine of the clunker must be destroyed on site. Dealers must do this because it is a violation of federal law to resell a vehicle that has been traded in under the clunkers program.

A mechanic pours a water and silicate mixture into the engine after draining all the fluid, and then runs the engine until it seizes up. After the mechanic fills out the necessary paperwork, a junkyard hauls the car away and finishes scrapping it. Once at the wrecking yard, the vehicle's destroyed engine must then be crushed within 180 days of its arrival.

At Charlie's Auto and Hardware in Stockton, owner Stan Powers has seen more and more cars being towed his way in the past week. His wrecking yard is participating in the program, but he said he has mixed emotions about it. Powers said even though he stands to benefit in the short-term, he is concerned about where the money will come from to fund the program.

He said he has 20 cars he has picked up from various dealerships and that he is waiting to gather between 10 and 15 more in the next few days. He said the program has been successful because it has spurred spending and given tow truck drivers, mechanics and dismantlers extra work.

"It's perked dealers up and it gets down to the bottom-feeders," Powers said.

Even though the engines, which constitute a significant portion of a recycled vehicles' overall value, are destroyed before he gets to touch them, Powers said it doesn't affect his bottom line. He is still able to sell tires and alternators off scrapped vehicles. He estimates that each car will bring him roughly $150 in scrap weight.

Powers stands to benefit if the U.S. Senate approves another $2 billion for the program. In his estimation, he could expect to more than double the amount of qualifying vehicles he has if the program is given a second wind. "Overall, it's the best (program) yet to stimulate the economy," Powers said.

Back at Geweke Ford Mercury, Bailey sums up the program the best he can:

"It's a headache that's worth it."

Reader Feedback

tosh conn wrote on Aug 4, 2009 10:26 PM:

" I am still struggling with the concept of why i should pay about $ 10,000 a car [$ 4,500 plus Osams "overhead" ] for your car. Can you please send $ 4,500 for me to put in "green" landscaping, maybe i can add a few algore trees too. ????? what a sick, sick waste of the money you simpletons work for. "

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jramagic wrote on Aug 4, 2009 9:00 AM:

" Well, my trusty and rusty 1978 F-150 soldiers on...saved from the crusher by the illogic of Program. A program that would incentivize you to purchase a "green" vehicle and also boost lagging car sales. I was certainly ready...but no dice. My '78 was "too old". Yet the nearly identical '84 is eligible...even though it is cleaner and more economical than my '78. Typical government logic at work where. Oh well, my dough is still in my pocket and the old '78 still runs great. "

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pooreastside wrote on Aug 4, 2009 8:34 AM:

" I can understand dealership confusion. The way that clunker bill is written, I can't even figure out whether my car qualifies or not. The year does, but it is based on original gas mileage on the car not the present gas mileage, that is I think that is what it says. ha. "

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JustTheFacts wrote on Aug 4, 2009 7:54 AM:

" While I noted that sales of Ford vehicles have shown a marked increase, I think that indicates that participants in the program misunderstand the intent. The idea isn't to buy "clunkers". Ha! A little humor from a Chevy man. "

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