‘Cash for Clunkers’ stalls | SteamboatToday.com
Blythe Terrell

Back to: News

‘Cash for Clunkers’ stalls

Car sellers wait to ensure reimbursement from government

Franklin Crandall looks at a new Outback at Cook Chevrolet, Jeep and Subaru in Steamboat Springs. Crandall was hoping to trade his 1998 Jeep as part of the "Cash for Clunkers" program.

On the ‘Net

Information about the “Cash for Cunkers” program is at http://www.cars.gov

— Local car dealerships have put their “Cash for Clunkers” sales on hold until they’re confident the government will put aside enough money to reimburse them.

The federal program allows buyers to save as much as $4,500 when trading in older cars for more fuel efficient new ones. Lawmakers started the program, officially called the Car Allowance Rebate System, with $1 billion in the fund. The money drained faster than expected. Congress is considering adding another $2 billion.

“Overall, I think it’s exceeded everybody’s expectations, including our legislators,” said Jeff Steinke, general manager of Steamboat Motors. “One week, going through $1 billion, that’s just mind-boggling.”

That comes to 222,222 vehicles if all get the top trade-in deal. Some new cars don’t meet the program’s requirements, and others meet them at a lesser value of $3,500. Steinke’s dealership has suspended the program, as has Cook Chevrolet, Jeep and Subaru.

Scott Cook at Cook Chevrolet said he has sold three or four cars through the “Cash for Clunkers” program and taken deposits on a few more. Steamboat Motors also is taking deposits.

The program started July 1, but the government didn’t release rules until July 24. Dealers sprang into action to register for the program and get approval, and Cook said his employees haven’t been able to reach anyone to help them sort through questions.

“That, in the real world, is a major problem, when you start something before the rules come out,” he said.

If he’d been running things, Cook said he might have put out the rules July 1, allowed dealers to opt in for the program and officially rolled it out Aug. 1. Steinke also said he’d have gotten the rules straight before launching such a program.

“The whole idea behind it is a good idea,” Cook said. “We’re going to be green, we’re going to get rid of some of the polluting, low-mileage cars for some of the higher-mileage cars. : They just didn’t have the structure in place to handle it.”

According to an Associated Press story, Senate Majority Leader Harry Reid signaled Tuesday that the Senate will vote to extend the program before senators go home Friday. The White House had warned that the program could end Friday if the Senate doesn’t add $2 billion to it.

Car dealers must dispose of the trade-ins, and that means disabling the engine and shipping cars to salvagers on the Front Range. The government gives dealers $250 a car for that, which Steinke said didn’t cover his costs. It takes about $200 to move the car and $100 to disable it, he said.

“We’re losing on that deal, but that’s because we don’t live in Denver or the Front Range,” Steinke said.

Cook said he suspended the program partly because the National Automobile Dealers Association leader had done so. NADA Chairman John McEleney said this on the organization’s Web site:

“Until further definitive guidance on the availability of funding is provided by the Administration, dealers who accept additional ‘clunkers’ deals may face a risk that they will not be reimbursed.”

At $4,500 a car, it’s not worth the risk, Cook said.

But he and Steinke said the program is stimulating demand and drawing people to dealerships. Some are buying cars that don’t qualify simply because they want or need them. Others who waited to buy cars and found out they don’t qualify for “Cash for Clunkers” are buying anyway.

That’s revealing pent-up demand for cars, Steinke said. Overall, he’s pleased with the intention of the program – if not the execution.

“Everywhere I go, people are asking me about it, which means everyone has heard about it. : People that aren’t in the market are now putting themselves in the market,” Steinke said. “People are coming in and buying things that may not even qualify. They’re buying used cars, and it’s done that all over the country.”