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Clunkers program draws car buyers in first days

By DAN STRUMPF

NEW YORK — Car and truck owners looking to junk their gas guzzlers are flocking to dealerships to take advantage of the government’s “cash for clunkers” program and buy more fuel-efficient vehicles, boosting sales in showrooms across the country.

“It’s water to thirsty people,” said Dave Kelleher, owner of two Chrysler dealerships outside Philadelphia. He said the number of shoppers has more than doubled at one of his dealerships and is climbing at the other.

“The last two days have been ripping,” he said.

CHARLES KRUPA/THE ASSOCIATED PRESS Salesman Ivan Lovera, right, hands Ally Mahoney, of Billerica, Mass., the keys to her new car Tuesday at Commonwealth Motors in Lawrence, Mass. The Mahoneys traded in their 1999 Chevrolet Tahoe for a new Chevrolet Aveo, taking advantage of the federal government’s “Cash for Clunkers” incentive program.

The program — officially called the Cash Allowance Rebate System, or CARS — took effect over the weekend at the nearly 20,000 car dealers who have signed up with the Department of Transportation. The program offers rebates of $3,500 to $4,500 for car shoppers who scrap their old vehicles to buy ones with better gas mileage.

Jim Aten, 68, was at a Toyota dealership in Gladstone, Ore., where he used the government rebate to get a peppy new Scion xB.

The car gets about 28 miles per gallon on the highway compared with 17 for his old Ford Starcraft, a monster of a vehicle.

Without the incentive “I would probably keep driving it,” Aten said.

He said he was concerned that the government was spending money on the program, but acknowledged, “Maybe it will jump-start the car industry a little bit.”

In Chattanooga, Tenn., the rebates generated about a dozen deals over the weekend for Mountain View Ford. “Most of them are truly clunkers,” Mountain View President Clay Watson said of the big Expeditions and vans that customers have been trading in.

One customer brought in a 1989 Ford F150 pickup. It had 285,000 miles on it and would have gotten only about $200 or $300 in a trade-in.

Congress passed CARS earlier this year to help boost flagging sales and get some of the filthiest cars and trucks off the nation’s roads. Nationally, new vehicle sales are down 35 percent for the first half of the year, and the downturn has been devastating for automakers and dealers alike.

Here are the program’s rules:

The trade-in vehicle must be a 1984 model or newer and must get 18 mpg or less in the government’s combined highway/city ratings.

Buyers can get $3,500 for a new car if it gets at least 4 mpg more than the old one. That rises to $4,500 if the new vehicle gets at least 10 mpg more.

For SUVs, pickup trucks or minivans, owners can get a $3,500 rebate if the new vehicle gets at least 2 mpg more than the old vehicle, $4,500 if it gets at least 5 mpg more.

That is a good deal for customers with old vehicles that would get less than $3,500 in an ordinary trade-in.

Those with a vehicle worth more than that, however, are probably better off selling it.

Under the program, the traded-in gas guzzler cannot be resold by the dealer and put back on the road. It must be junked.

Congress has set aside $1 billion to remove about 250,000 vehicles through CARS.

As of Tuesday, the government had dispensed about $17 million, for 4,026 new vehicle sales, according to the National Highway Traffic Safety Administration. More than half were cars; the rest were pickup trucks, sport utility vehicles and vans.

The program ends on Nov. 1, or earlier if the money runs out.

Kitty Van Bortel, who owns a Ford and a Subaru dealership in Victor, N.Y., said she normally sells about 50 to 60 cars and trucks a week, but last week sold well over 100.

“Everybody is just panicked that they’re not going to get the deal because the money is going to be gone,” she said.

Some industry watchers are skeptical the program will do much to lift auto sales.

The auto Web site Edmunds.com said that in any given three-month period, Americans trade in about 200,000 vehicles worth less than $4,500.

That means, given the program’s 250,000-vehicle cap, it will spur only 50,000 additional car sales.

“The incremental sales will be limited and at a considerable cost,” Edmunds CEO Jeremy Anwyl said. “We are paying consumers to do something most would do anyway.”

Others have criticized the program as overly complicated.

Posted at www.sunherald.com on July 28, 2009

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