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Dealers Offer Post Clunkers Stimulus Programs

If you were shut out of CARS but are still considering new wheels, there are other options worth looking at.

by on Aug.21, 2009

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It is worth shopping around now even though the curtain has dropped on Cash for Clunkers.

As the Car Allowance Rebate System (CARS) or “cash for clunkers” program winds down this Monday, automotive retailers and manufacturers are attempting to keep the sales momentum going by offering a variety of incentives to keep showroom traffic flowing and the Clunkers sales increases going.

This, natural response from car dealers and makers who — however briefly — are seeing projected retail sales in August rise above the one million mark for the first time in two years, offers prospective buyers excluded from the taxpayer-financed rebate program a chance to still save money on a new or used vehicle. It is worth shopping around now even though the curtain has dropped on Clunkers.

In the interest of honest disclosure, we here at The Detroit Bureau are biased – we do not think that car dealers are evil incarnate as they are frequently portrayed by more, well, mainstream media. We believe that promoting new vehicle sales is good for the economy, good for air quality, and about the only short-term way out of the Great Recession we have been enduring for far too long. The good dealers clearly lay out the deal for a customer and give them time to comparison shop.

We also think that pumping billions upon billions more taxpayer dollars into AIG or Citibank or their bloated executive bonuses will not help create or sustain jobs. It is clear to us that Clunkers helped the overall economy, perhaps more than any of the other pork that lawmakers over loaded the stimulus bill with. If automakers and dealers now show a little old-fashioned American “yes we can” spirit, we might be on the way to a sustained recovery. In addition, although a subject for another day, since the Federal program was so effective, why is the government ending it now?

One example of such a private “post Clunkers” program now available is at http://www.autostimulusplan.com/, which, to be clear, is not affiliated with CARS. Some of the larger auto retailers in the country are using this web site to promote a dealer-funded rebate program that gives buyers up to $4,500 of additional trade-in value towards the purchase of a new or used vehicle. Better still, unlike Clunkers, which ends Monday, it runs through November.

This latest sales promotion deserves a closer look in my view since is more inclusive than the politically compromised “Clunkers” terms. All trade-ins older than the 2007 model year are eligible regardless of their fuel economy, and consumers can purchase or lease any new or used vehicle with an improved fuel economy of 2 mpg to qualify. This is in contrast to the government program, which excluded trade-ins that got more than 18 mpg, or the purchase of used cars, and eliminated leasing contracts of fewer than five years, among other such restrictions. In addition, Clunkers required some vehicles to get at least four mpg better than the trade-in.

Here is how it works, according to Brian Benstock, General Manager and Vice President at Paragon Auto Group in New York City, one of the largest Honda and Acura dealers in the U.S. and the largest seller of certified pre-owned Hondas and Acuras.

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CARS Program is Clearly an Effective Stimulus!

August sales will likely cross the one million mark for the first time in the past 12 months, just as Clunkers is about to end.

by on Aug.20, 2009

And the Clunkers trade-in new car sales winner is?

And the Clunkers trade-in new car sales winner is?

There’s good news and bad news about the government’s Car Allowance Rebate System (CARS) or “cash for clunkers” program, depending on your point of view.

First, after months of debate that started last January in Congress — as China and European countries went ahead with their own Clunkers programs — the U.S. version officially got under way in late July. CARS immediately increased vehicles sales by at least 250,000 units or more. When the first $1 billion in taxpayer funding evaporated in about a week, Congress took $2 billion from another auto technology program to keep CARS rolling. That cash is now apparently gone, or will be by September.

An announcement could come as early as today that the program’s $3,500 to $4,500 rebates are over, but we’re guessing  that the Obama administration will face the same problem that automakers have historically had with rebates – once cash handouts are in place they are almost impossible to remove as buyers simply wait for the next round of rebates or stay out of the market. We’ll see how this plays out in the depressed economy.

Meanwhile, without question, the program is wildly successful at boosting auto sales. New vehicle retail sales in August are now forecasted to cross the 1-million-unit mark for the first time in the past 12 months, according to J.D. Power and Associates, which gathers real-time transaction data from more than 10,000 dealerships across the United States.

Based on the first 13 selling days of the month, retail sales for the month of August are expected to come in at slightly more than 1 million units, up nearly 2% from one year ago. This marks the first increase in retail sales volume since June of 2007.

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Crucial “Clunkers” Data Sought by Public Citizen

It files a Freedom of Information Act request for specifics.

by on Aug.05, 2009

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The public should have access to the details of the program so it can assess whether taxpayer money is being spent well, says Public Citizen.

Public Citizen filed a Freedom of Information Act (FOIA) request yesterday for information that it says is needed to assess whether the Car Allowance Rebate System (CARS) or “cash-for-clunkers” program is actually working.

The Washington-based pressure group made the request claiming the Obama administration “has not been forthcoming with key information” just as Republicans in the Senate appeared to be dropping opposition to a proposed $2 billion extension of the popular program.

At the center of the controversy is a lack of agreement about the goals clunkers purports to accomplish: a general business stimulus and taxpayer bailout of car dealers and automakers, or a clean air initiative that will reduce emissions and decrease fuel consumption. All of those arguments were put forth since the proposed legislation appeared last January.

“The public should have access to the details of the program so it can assess whether taxpayer money is being spent well and whether the program is truly helping curb auto emissions,” said Lena Pons, policy analyst for Public Citizen. “If the program is as successful as the administration claims, then releasing the information should only strengthen its case.”

After the Department of Transportation announced that its initial $1 billion in funding had been spent after just one week, the House of Representatives approved another $2 billion in funding. Critics claim that the $1 billion spent was derived from early reports from auto dealers and has not yet been verified by NHTSA. The Senate should get more information before voting to approve this additional $2 billion in funding, Pons said.

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House Approves Another $2 Billion in Clunkers Cash

Buyers drain initial $1 billion in less than a week.

by on Jul.31, 2009

As many as a quarter million Clunkers could be crushed under the CARS program - even more if the Senate signs on to a $2 billion expansion of the Cash-for-Clunkers program.

As many as a quarter million Clunkers could be crushed under the CARS program - even more if the Senate signs on to a $2 billion expansion of the Cash-for-Clunkers program.

If there’s a chance it’s broke, fix it.  That seems to be the preemptive mantra of federal lawmakers, responding to word that the Cash-for-Clunkers program is ready to run out of gas, or, more accurately, cash.

The program, conceived as a way to kick-start the sluggish American automotive market, was passed by Congress, in June, though it only formally went into operation a week ago.  Officially known as CARS, for Cash Allowance Rebate System, it provided vouchers worth up to $4,500 for those trading in old vehicles for newer, more fuel-efficient models.

Originally intended to run through November, and to help promote the sale of around 250,000 high-mileage models, there are preliminary indications the Clunkers program is far exceeding even the most optimistic expectations.  Already, the CARS fund has issued vouchers to about 96,000 motorists, but with overloaded dealers struggling to fill in the paperwork, observers now believe that the $1 billion set aside by Congress may already have been exceeded.

High-mileage insight!

High-mileage insight!

“My showroom is packed,” said dealer Earl Stewart, of Earl Stewart Toyota, in Riviera Beach, Florida.  He added he is “really concerned” that he may not be able to complete sales with 61 new customers if, in fact, CARS has run out of cash.

Dealer Stewart isn’t the only one worrying.  In a Friday afternoon meeting with reporters, Pres. Barack Obama noted that the Clunkers program has “succeeded well beyond our expectations and all expectations,” but warned that there “legitimate concerns funding in this program may soon go out.”

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Cash-for-Clunkers Funds Could Run Out Fast

Sales soaring, auto stocks rising, but CARS program may need more funding.

by on Jul.30, 2009

More than 10% of the $1 billion set aside for the Cash-for-Clunkers was paid out less than a week into the program.

More than 10% of the $1 billion set aside for the Cash-for-Clunkers was paid out less than a week into the program.

Anyone who wondered whether the cash-for-clunkers program would actually spur demand in the moribund U.S. auto market no longer need worry.  The $1 billion federal pot designed to get motorists to trade in their old, inefficient vehicles for newer, high-mileage models has received a roaring welcome from consumers, carmakers as diverse as Ford and Subaru hinting July could be their strongest month in quite some time.

Less than a week after the program officially began, federal officials reported that a full 10% of the money set aside for what is formally known as the Car Allowance Rebate System, or CARS, has already been paid out.  That’s leading some lawmakers to question whether more money might be set aside by Congress.

“Having this program last for only a few weeks would limit (its) potential and disenfranchise a number of consumers who wish to take advantage of the program,” Candice Miller, a U.S. Congresswoman from suburban Detroit, wrote her colleagues, adding that, “The program has the possibility to truly jumpstart our economy.”

Subscribe to TheDetroitBureau.comIt’s certainly helping kick-start investor interest in the industry.  Ford Motor Co. shares surged as high as $7.48, today, before settling back to close at $7.39, the highest end-of-day figure in a year.

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Chrysler Doubling Clunkers CA$H

Maker's new incentive program offers up to $9,000.

by on Jul.22, 2009

Chrysler's new CA$H incentive program will double the maximum credit offered under the government's new Cash-for-Clunkers program - to a maximum $9,000 - on vehicles like this Jeep Wrangler.

Chrysler's new CA$H incentive program will double the maximum credit offered under the government's new Cash-for-Clunkers program - to a maximum $9,000 - on vehicles like this Jeep Wrangler.

Hoping to kick-start its lagging sales, now that it has emerged from bankruptcy, Chrysler Group will offer to double the government’s new Cash-for-Clunkers subsidy, meaning incentives of up to $9,000 on “eligible” Chrysler, Dodge and Jeep products.

The “Double CA$H for Your Old Car” program is the first big incentive campaign since the “new” Chrysler emerged from Chapter 11 protection, little more than a month ago.  The smallest of Detroit’s Big Three has been hard hit by consumer concerns about its health – June sales plunging 42%, the worst of all major manufacturers.

Stay on top of the automotive world!

Stay on top of the automotive world!

The Double CA$H promotion coincides with the launch of the federally-funded Car Allowance Rebate System, or CARS program.  Those who qualify, trading in an old, low-mileage vehicle for a new, higher-efficiency model, can collect a federal voucher worth as much as $4,500 towards the new vehicle.

Chrysler, however, will provide incentives up to $4,500, “even if they don’t have a vehicle that qualifies under the U.S. Government’s program,” said Steven Beahm, the automaker’s vice president of sales operations.  Buyers can opt for an alternative 72-month loan at 0% financing.

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CARS Not Quite Ready for Implementation at DOT

The Department of Transpiration claims it will put safer, cleaner, more fuel efficient vehicles on road.

by on Jun.29, 2009

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Go to http://www.cars.gov/ for CARS.

U.S. Transportation Secretary Ray LaHood said his department stands ready to implement a new buyer incentive program signed into law last week by President Obama that will help consumers pay for new, more fuel efficient vehicles when they trade-in a less fuel efficient car or truck. 

While the Car Allowance Rebate System (CARS) Act makes transactions on and after July 1 potentially eligible for credits under the CARS program, dealers and potential customers may want to wait until all of the detailed issues that must be addressed in the implementing regulations are resolved and the final rule is issued. Issuance will occur around July 23. Click here to sign up for e-mail updates

“At this important time for the industry, we will help to boost automobile and truck sales while putting vehicles on the road that are safer, pollute less and get more miles to the gallon,” said Secretary LaHood.  

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Under CARS, buyers can receive up to $4,500 toward the purchase or lease of a new car or truck that meets the necessary criteria.    

To get a rebate, the new car must be priced at $45,000 or less, and, to receive the maximum rebate of $4,500, the new car must have a fuel economy rating of at least 10 miles-per-gallon greater than the car to be traded. To receive an incentive of $3,500, the same car would be traded for one that gets at least four miles-per-gallon better gas mileage.

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