Clunker Rebate Ignites Buyers

Car dealers in Iowa are crowing over the federal rebate program, even though many are still waiting to be reimbursed.

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Note: The federal auto rebate program will end at 8 p.m., Monday, August 24.

New car dealers in west-central Iowa are using terms like “huge,” “tremendous” and “overwhelming” to describe the success of the federal government’s stimulus-minded “Cash for Clunkers” incentive program.

Initially funded with $1 billion in federal money, the voucher program received another $2 billion on a U.S. Senate vote last week. Under the clunker rules, new-car buyers with trade-ins of older vehicles with fuel efficiencies rated at 18 mpg or less can receive a government voucher of $3,500 if the new-car purchase is at least four miles per gallon more efficient — $4,500 if the buy improves the mileage ratio by 10 mpg or more.

Lou Walsh, owner of Walsh Motors in Carroll and a 43-year veteran in the auto sales business, said even though paperwork difficulties with the government have prevented his family operation from processing all the sales, there’s no doubting Cash for Clunkers has been a boon.

“It would have been the biggest month in our history,” Walsh said of July.

After going into effect in July, the program ran out of money after just one week, setting up the call for more Congressional action.

Walsh, who sells new Toyotas and General Motors vehicles, said deals have been arranged with customers for more than 30 cars and trucks. Many of the people Walsh has dealt with are not what the dealership would consider typical new-car buyers, Walsh said.

How the “cash for clunkers” program works.

“These are people who have never been in the market for new,” Walsh said. “I mean, they’re driving a 10-year-old car.”

At Champion Ford Inc. in Carroll, co-owner and general manager Ken Payer said at least 15 sales at the end of July were tied to the clunkers program. He called the federal incentive program  “a once-in-a-lifetime opportunity.”

“It’s been a huge success,” Payer said. “Ford sales have been really good due to this program.”

In fact, nationally, the U.S. Department of Transportation says that the Ford Focus compact was the top-seller under the clunkers program, The Wall Street Journal reported.

Kevin Wittrock, manager of Wittrock Motors Co. in Carroll — which sells Chryslers, Dodges, Jeep and GMC — said he’s moved almost as much inventory as possible.

“It’s been a huge success,” Wittrock said. “People were so worried about inventory getting gobbled up.”

Wittrock said that he recently sold a Dodge Caliber car to a Sioux City couple over the phone. The couple never even looked at the car but were worried it would be gone by the time they could make the two-hour drive from Sioux City (where they said they couldn’t find the model) to Carroll.

“We’ve sold nearly every car on the lot that qualifies,” Wittrock said.

In Lake City, Gus Macke, owner of Macke Motors there and Macke Ford in Coon Rapids, said the showrooms were full of customers instantly when the clunkers program went live.

“We had people waiting in line,” Macke said. “The Cash for Clunkers program was an overwhelming success.”

Macke, and other dealers also, said old trucks and sport-utility vehicles have been common trade-ins.

What’s more, Macke said, Ford is coming out a big winner with the program, because although “foreign” cars are included in the rules, many Americans are making something of a combined consumer-political statement with their purchases.

“People are happy that they (Ford) didn’t take any (federal) bailout money,” Macke said. “People feel really good about Ford.”

A third-generation auto man, Macke said there’s a chance his dealerships could literally run out of new vehicles that qualify. “August is already our best month of the year,” said Macke.

Like other dealers, Macke is waiting for the government vouchers to be processed. Many of the cars sold under the program have been delivered even as Macke waits for the federal money.


The federal voucher program to induce purchases of new, more
fuel-efficieint cars has dealer in Iowa dealerships hopping.
 
“The government owes me over $300,000,” he said.

Walsh said dealers across the nation are facing challenges with processing the Cash for Clunkers transactions.

“It’s been a nightmare administratively,” according to Walsh. “If this is any indication of what health-care (reform) is going to be like, it’s scary.”

The new-car purchase represents just one side of the equation as the federal government chases twin goals of stimulating a flagging economy and improving the environment. Not all used cars qualify. They have to meet certain age, mileage, condition and insurance-history criteria to qualify, dealers stress.

Once the transactions are completed the local dealers that sold cars under clunkers must literally destroy the engines in the used cars to take them off the road.

They are required to run sodium silicate or “liquid glass” through the engines, a car-killing process the government describes in a 136-page manual.

After that’s done at Walsh, the used cars will be taken to auto salvage where all parts, except the irreparably damaged engines, can be sold.

Wittrock understands the rules and the environmental intent of the program, but it pains him to see cars that are road worthy destroyed.

“We’ve got some real clunkers,’ Wittrock said. “But we’ve got some vehicles that shouldn’t be destroyed.” He thinks there should have been more options for a “perfectly good car.” “Why couldn’t we take that car and just donate it to a charity or needy family?” Wittrock asks.

While Wittrock is confident that the government will make good on the vouchers, he said his dealership is not destroying any good used cars until he’s sure the government checks will clear.

 

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