RSSAmanda Ruggeri
"Cash for Clunkers" program (c) Michael Osbun
The "cash for clunkers" program that lets consumers trade in an old vehicle for a rebate for a new, more fuel-efficient car, recently ended.
That's after it ran through its first
He recently spoke about how dealers have been reacting to the program and what the problem was with reimbursements. Excerpts:
When NADA started lobbying for cash for clunkers, was there much resistance in
This one was pretty popular going in. Even with some of the conservative Democrats and Republicans, there was no real strong opposition to it, with a few exceptions. Nothing's easy these days in
What are some of the problems with the program?
The program initially, in the first week, was very cumbersome. It was hard to get through the website. The program was put together fairly quickly, and it's not something that the federal government's accustomed to, nor dealers, so it took a little while to get through the bureaucracy. Then there was a lot of concern if dealers were going to get reimbursed for the money they had advanced to customers. But we seem to have gotten past that.
What were the complications with the reimbursement process?
It was just a very labor-intensive, document-intensive application process. I think it went a little over the top in terms of trying to avoid abuse.
Has that improved?
It seems to be much better. The requirements have been relaxed a little bit. More importantly, they have put on a lot more people. They've got about twice the number of people working the phones and computers than they did initially.
How are dealers' inventories?
Inventories are quite low. We wish we had more to sell. But it's probably enough for the duration of this program, and vehicles are arriving every day.
You're a car dealer yourself. What has your personal experience been with the program?
Our response has been, I think, much like the national response. It's been very positive. We've had more souls, more traffic, more phone calls, more Internet leads, more interest, than we've seen in a year. People recognize it as a real value.
Are you worried that the program has artificially boosted short-term buying, only to set up a big sales drop later this year?
You always have that concern. Dealers have expressed that to me. After 9/11, GM and the other companies came out with zero-percent financing for the first time. That created a huge volume of sales, and there was a hangover from that. I think this is a little different. There is a tremendous amount of pent-up demand. We've been running at about 60, 65 percent of the sales rate compared to the previous year. The scrappage rate--the rate at which vehicles were being taken off the road--actually exceeded new-vehicle sales for the first time in history. That tells us that a lot of people are still in the market but, because of the overall economy, did not have confidence to proceed with a major purchase. So rather than pulling from the future, we might be driving back some sales that might have occurred in the fourth quarter of '08, in the first two quarters of '09.
Some critics have said that the program takes sales away from used car dealers. Are they annoyed?
There is some of that.
A lot of these vehicles that are being crushed would have ended up in their inventories and would have been sold to some of their customers. There is some resistance there, certainly. But on a positive side, the used-car values have stayed quite high despite this, despite the fact that there's been an artificial stimulus for new vehicle sales. Ordinarily you'd expect used car values to drop, and that has not happened. So that's a good thing.
Maybe Cash For Clunkers Helped The Economy After All
Matthew Bandyk
Daniel Gross at Slate makes the case that the evidence is in, and cash-for-clunkers gets a pretty good return as stimulus: If we use Taylor's estimate, about 250,000 extra cars were purchased (40 percent of 625,000). And if each cost $29,000, those sales generated about $7.3 billion in revenue in the space of a few weeks. That's a pretty good return on $2.6 billion in government spending.
4 Things to Know About the Cash-Strapped 'Cash for Clunkers'
Matthew Bandyk
The government set aside $1 billion for the "cash for clunkers" program, which is meant to give $3,500 or $4,500 vouchers to people who
trade in their gas-guzzling vehicles for new, fuel-efficient ones. But now that the
Cash for Clunkers Program Has Its Roadblocks
Kathy Kristof
If you want to trade in your junker for a new vehicle under the federal government's 'cash for clunkers' program, you'll have to act fast. Plus, qualifying for the vouchers isn't as simple as you might think. In fact, you'll need to know three things to decide whether it's a good deal for you.
Making Sense of 'Cash for Clunkers'
Matthew Bandyk
With new-car sales slumping, automotive companies have been looking for ways to get consumers back into showrooms. Washington checked one item off car companies' wish list when it passed the Consumer Assistance to Recycle and Save Act of 2009 -- commonly known as 'Cash for Clunkers' ...
(c) 2009 U.S. News & World Report