Car dealers see uptick as 'clunker' law arrives

7/14/2009

As consumers and auto dealers wait for the implementation this month of the $1 billion "cash-for-clunkers" law, something unusual is showing up in the back of car lots across northwest Ohio: "Sold" signs.

Given the law's limited resources, dealers say many customers are working out their deals now and putting deposits down on vehicles, getting everything together and just waiting for the $4,500 from the government to show up later this month.

"I've got five or 10 deposits down right now from customers. We park them out back and put a 'sold' tag on them," explained Tim Koehrman, new car sales manager at Yark Nissan on Central Avenue, Sylvania Township. "The toughest part to me is, I want to go, let's do it, and we have to hurry up and wait."

He is not alone: Dealers across the region have reported a renewed interest in new-car sales spurred, in part, by the Car Allowance Rebate System, more widely known as "Cash-for-Clunkers." The program, signed into law by President Obama in June, offers a trade-in credit of up to $4,500 to owners of cars built since 1984, with fuel economy of 18 miles per gallon or less.

Qualifying vehicles are taken off the road and recycled once they are turned in. Consumers receive either $4,500 or $3,500, depending on the vehicle they're turning in and what they're buying.

The law nominally came into effect July 1, although final details setting out the full government rules will be published July 24.

"We're seeing a lot of interest," said Brian Shephard, a longtime auto salesman with Matthews Ford Oregon. "It's going to help the store out tremendously, once it gets started. It's just hard right now for us to keep up with the details of the program."

The program also applies to SUVs, vans, and pickups, and to both domestic and foreign automakers. Participating dealers assess the discount, apply it to the new vehicle, and then obtain reimbursement from the government.

The National Highway Traffic Safety Administration is overseeing the program. It has Web sites - cars.gov and fueleconomy.gov for consumers to determine if their vehicle is eligible for the program.

"People have been talking about this since it was first brought up in February, but it's really increased since the last two weeks of June," said Joe Mehling, sales manager at Dave White Chevrolet in Sylva-nia. With about a dozen deals down on paper waiting for the program to kick in, Mr. Mehling said he's been surprised at the level of interest consumers have shown in the program.

"It's kind of nice to be stockpiling [deals] on the back lot again," Mr. Mehling said.

One concern among dealers is the basic math: A $1 billion program divided by an average of $4,000 per vehicle equals just 250,000 eligible participants. If analysts are correct and there will be about 10 million vehicles sold in the United States this year, that's only about three weeks' worth of sales before the program's funds are exhausted.

"We've got approved credit app[lication]s, and the cars that people think they want to buy, but it could be gone in a week," cautioned Rob Whitner, new car sales manager at Brondes Ford, Maumee. "It's kind of scary."

Hyundai dealers have gotten a jump of sorts on the program. It started offering the government program to its customers last week, guaranteeing the transactions privately if they turn out not to qualify.

The Korean automaker reported a 7 percent increase in sales because of the decision.

Contact Larry P. Vellequette at:

lvellequette@theblade.com

or 419-724-6091.