Dealers react to ‘cash for clunkers’ |

Dealers react to ‘cash for clunkers’

Area salesmen have mixed feeling about new federal recovery program

Collin Smith

Local car dealers hope a new federal recovery program will hit the gas pedal on new vehicle sales, though optimism is somewhat hard to come by.

Monday was the first day of the Car Allowance Rebate System – more commonly known as “cash for clunkers” – that allows consumers to get a $3,500 to $4,500 credit on new cars if they trade in an old car.

The program got started almost a month after President Barack Obama signed it into law June 24.

Craig-area dealers, however, said the program might be hamstrung by trade-in requirements that stem from the government’s desire to put cleaner cars on the road.

Trade-ins must be less than 25 years old, go toward the purchase of a new vehicle and generally get 18 miles per gallon or less, though some large trucks and cargo vans have different mileage standards.

In essence, the program attempts to kill two birds with one stone: stimulate a fledgling automotive industry and reduce greenhouse gas emissions by putting cleaner-burning vehicles on the road.

However, requirements already have prevented some prospective buyers from participating.

At Cook Chevrolet, customers were turned away Monday because their old vehicles’ gas mileage was too high.

“They had been looking for a couple months, and when we finally got the final rules on Friday, we rang them up, and they didn’t qualify,” Cook Chevrolet owner Scott Cook said.

Cook added that he thinks the program will help sell cars, though it will just take time for consumers and dealers to get used to the rules.

“If you have a trade-in that qualifies, you almost have to buy a new car because it’s such a good deal,” he said. “Take a new Cobalt. After the credit and the factory incentives, you could walk out of here with a new car for under $10,000.”

But at Craig Ford, co-owner Jerry Thompson said he would be surprised if the credit system does much for dealerships.

“Most people aren’t driving clunkers because they prefer to, it’s all they can afford,” he said. “Then, you have these new financing guidelines where it’s hard to have good enough credit for any kind of financing package.”

Thompson also worried about the program’s hidden costs and what issues that may generate for dealers and consumers alike.

Representatives from Victory Motors said they would not comment until they fully understood the new government program.

According to Cook, that involved sitting in on a 1,700-person Web seminar Monday morning and reading through a 130-page manual.

He and Thompson agreed that sorting through the finer points would be a headache.

That includes what risks dealers expose themselves to by allowing credits, Craig Ford salesman Jeff Corriveau said.

What if a customer lies on his or her credit application, Corriveau said. The dealer has to give the credit at the point of purchase, and then be reimbursed by the government.

If the customer is ineligible, what protection does the dealer have?

“You can’t afford to make a $3,500 mistake in this economy,” he said. “You’re looking at a 1.5- to 2-percent profit. Yeah, I’m a little nervous. But I guess until the government comes up with something easier or more useful, this is what we have.”

Craig Ford and Cook Chevrolet are committed to offering the credits, however, because that’s in the best interest of customers.

“We want to do everything we can to get every penny into our customers’ pockets that we can,” Corriveau said. “Do I have faith that this government is going to make things easier? Not much.”

Collin Smith can be reached at 875-1794 or

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