August 25, 2009
Dealers: Clunker program boosts sales
Federal program ended Monday that gave buyers up to $4,5000 rebate for used cars
CORTLANDVILLE — Pat Simon went to Royal Motor Co. on Route 281 Monday morning to turn in her 2000 Chevrolet Silverado pickup truck, which will soon make its way to a junkyard.
On Thursday, Simon, 60, of Harford had bought a new Chevrolet Impala through the Car Allowance Rebate System program, commonly known as Cash for Clunkers.
The $3 billion federal program lasted from July 27 to Monday. People traded in old vehicles with low gas mileages to receive rebates on new, more fuel efficient cars.
Simon received a $3,500 discount by turning in her truck.
Consumers were eligible to receive either a $3,500 discount or a $4,500 discount, depending on the amount by which they were improving their fuel mileage through the exchange.
Joe Reagan, owner of Royal Motor Co. and Royal Nissan Subaru, Reagan said Monday morning that he had sold more than 60 cars through the program, which he thinks is twice the total of new vehicles he would have sold from July 27 to Monday without it.
These sales amounted to about 80 percent of his total sales since the program began, he said.
He expects to be reimbursed by the federal government soon for the discounts he has given to customers, such as Simon, who participated in the program.
Simon said she was considering purchasing a new car for a while, and would have done it anyway if the Cash for Clunkers program had not been started.
“It just made us make up our minds a few weeks earlier,” she said.
Simon’s pickup truck was rated at about 17 or 18 miles per gallon, and her new sedan will get her about 23 or 24 mpg, she said. Cars eligible for the program had to get 18 mpg or less.
“Gas is killing us. That’s another reason we wanted to get rid of our truck,” she said.
While he thinks there were problems in administrating the Cash for Clunkers program, Reagan is very pleased with it overall.
“I think it’s probably one of the best consumer programs ever offered to the general public,” Reagan said.
Reagan received a letter from state Attorney General Andrew Cuomo’s office July 29 stating that Royal Nissan Subaru advertisements that were printed in the Cortland Standard failed to mention that consumers must trade in cars that get 18 mpg of gas or less to receive a rebate. Royal Nissan Subaru was one of 40 dealerships statewide that received letters for omitting information about the program or using deceptive advertising practices.
Reagan said he used information he found on the federal government Web site cars.gov., which he said did not clearly show the requirements.
Dennis Bruce, owner of Cortland Chrysler Dodge Jeep on Route 281, said he also was pleased with the program, but he sees the possibility that some consumers who participated in the program might have bought cars from him in the next couple of months if the program was not created.
“The program was a very good program. It put some people into the market that may not have been considering buying a car before that,” Bruce said.
Bruce said that about 50 percent of the cars he has sold since the program began were sold through the program.
“We may have stolen some business from next month or the month after, but we’ll see what happens,” he said.
The back of the lot at Royal Nissan Subaru is filled with pickup trucks, sport utility vehicles, minivans and large sedans. They range from 1985 to 2005 models, Reagan said.
While a major reason for the program was taking inefficient, gas-guzzling cars off the roads, Reagan said an important aspect of it is that it has created a boost in business for car manufacturers, whose business has slowed significantly since the end of last year.
“I need 25 (Chevrolet) Malibus now. I wouldn’t have ordered them. I would have ordered five or six,” he said.
To disable the “clunkers” turned in under the program and keep them off the road, Reagan said he filters out the vehicle’s oil and replaces it with liquid glass, which seizes the engine, or stops it from working again. He then sells them to junkyards.
Many people who participated in the program could have kept driving their “clunkers” for another four or five years, Reagan said.
“These people were out of the market indefinitely,” he said.
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