Elated dealers awash in traded-in clunkers

Congress looks to give wildly popular offer another $2 billion.

Staff WriterAugust 1, 2009 

  • A clunker vehicle must be less than 25 years old on the trade-in date.

    It has to get 18 miles per gallon or less, although the rules are different for large pickup trucks and cargo vans.

    It must be registered and have been continuously insured for the full year preceding the trade-in.

    The $3,500 and $4,500 rebates apply only to the purchase of new vehicles.

    For more information about the program and to see if a specific vehicle counts as a clunker, visit www.cars.gov.

There's been an unusual sight in auto showrooms this week:

Customers. Lots of them.

The government's "Cash for Clunkers" program, aimed at spurring sales and killing gas guzzlers, has brought help to dealers beleaguered by industry restructuring and global recession. On Friday, dealers were fighting to keep the aid coming.

Confusion erupted Thursday night amid reports that the subsidy program, which was supposed to last as long as November, was running out of money less than a week after it took effect. The U.S. House rushed through a package Friday to replenish the coffers with $2 billion.

The Senate is expected to take up the matter next week.

"We are very supportive and very optimistic about what's taking place in Washington," said Robert Glaser, president of the N.C. Automobile Dealers Association. The program "has really, really stimulated the market. We're seeing more traffic out there than we've seen in the last nine months."

President Barack Obama in June signed the Consumer Assistance to Recycle and Save Act into law. It promised rebates of $3,500 to $4,500 to consumers who turned in a vehicle manufactured since 1984 with fuel economy of 18 miles per gallon or less.

The goal was twofold: To give consumers who retrenched amid soaring unemployment and the global economic slump incentive to buy new autos, and to remove inefficient vehicles from the road. As a condition of the program, dealers must kill the engines of the clunkers they accept and send the cars to salvage yards so that they will never again operate.

Congress set aside $1 billion for the program, which took effect Monday.

"We've been knee deep in it," said Michael Bardaxis, general manager of Fred Anderson Toyota in Raleigh. "We kind of thought there would be a little bit of a push, but every day this week we've been in double digits doing clunker deals, as we're calling them now."

The dealership had done about 90 by Thursday, he said.

Nick Angelis was among the first to take advantage. The owner of Ocean Stars Seafood Restaurant in Apex turned in a 1997 Land Rover Discovery that got about 12 mpg. He had wanted to get rid of it for a couple years.

"Thank God, in the United States they do this," said Angelis, 60, who is from Greece. "This program, it will help the economy, the environment. It will help people who need a vehicle."

Angelis purchased a Tacoma truck from Fred Anderson Toyota.

Before turning in his Land Rover, he expressed his appreciation by spray painting "Thanks Obama" on the vehicle.

A rocky launch

The program exceeded expectations but it hasn't been perfect.

Early in the week, there was confusion about which vehicles were eligible. The Environmental Protection Agency, after reviewing the fuel economy of some 30,000 vehicles, said that 78 vehicles that initially qualified no longer did so. And 86 that didn't would.

Add to that technical problems with the rebate process itself. The Web site that dealers access to file details has been sluggish and, at times, down altogether. One local dealer said it took six hours to process one rebate. Another hasn't successfully entered any.

Because of the hiccups, it's unclear exactly what the funding status is for the program. Estimates that the first $1 billion is exhausted aren't based on actual rebates approved but on surveys of dealers who have reported strong demand.

That could be an issue next week as the Senate decides whether to add more money. Senators are expected to take more time contemplating the program, possibly tweaking the requirements again.

"It got sort of a rocky start," said Ray Howard, general sales manager at Sir Walter Chevrolet in Raleigh. "Between the technical aspects and the political aspects, it's just not worked as smoothly as everybody hoped."

But the program is selling cars, Howard said, and that's a big plus.

"I have two customers as we speak right now in Cary taking advantage of it," Bill Shotwell said Friday afternoon. He runs Saturn's Raleigh and Cary stores and is part owner in those and the Saturn dealerships in Fayetteville and Chapel Hill. "There's so much enthusiasm."

The Triangle dealerships were flooded by customers Friday who were trying to squeeze in a deal before the money ran out.

Even with the action in Congress it's not clear how long the rebate program will last, but one thing is certain:

"It's a limited time," Shotwell said. "No doubt about it."

jonathan.cox@newsobserver.com or 919-836-4948

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