Clunker program ignites car interest
A government program, aimed at putting people in more fuel-efficient vehicles and scrapping ones with poor emissions, is luring prospective buyers to area showrooms.
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"It's definitely drawing some traffic, which we are grateful for," said Jeff Kjelstrom, salesman at Aitkin Motor Co. But Kjelstrom said there are concerns about funding and a cumbersome system to qualify buyers.
Congress designated $1 billion for about 250,000 vehicles through its Cash Allowance Rebate System or CARS program. The program is designed to remove those old gas guzzlers and help spur the economy.
A Jeep Cherokee Pioneer 4x4 sat outside Tanner Chrysler dealership in west Brainerd Thursday. It was the first vehicle the dealership took in as part of the federal "cash for clunkers" rebate incentive that encourages buyers to upgrade to more fuel-efficient vehicles with fewer emissions. Brainerd Dispatch/Steve Kohls» Purchase reprints of this photo.
If a new car gets at least 4 mpg more than the trade-in, buyers can get a rebate of $3,500 and they can get $4,500 if the new vehicle gets at least 10 mpg more. There is a list of qualifying requirements for the trade-in, including a requirement that it has been continuously insured for the past 12 months. For SUVs, pickup trucks or minivans, owners may get a rebate of $3,500 if the new vehicle gets a minimum of 2 mpg more than the old one or $4,500 if the improvement is at least 5 mpg more.
"It's a great time to update your pickups," said John Tanner, owner of Tanner Motors. "You only have to gain a couple of miles per gallon to qualify."
Dondelinger Chevrolet-Cadillac is selling vehicles at Baxter Village along Highway 371 North as part of a promotional event with the "cash for clunkers" federal program. Brainerd Dispatch/Steve Kohls» Purchase reprints of this photo.
Tanner said he thinks the government underestimated the consumer interest in the program popularly known as cash for clunkers. On Thursday, the Tanner Motors Chrysler-Mazda dealership was buzzing.
"We're just absolutely swamped," Tanner said, estimating the traffic in interested people was four to five times the level it was two weeks ago. A Bemidji buyer called and then drove to Tanner's in Brainerd to get a vehicle with the program here because of limited inventory farther north. Tanner said a lot of effort has been going to educate buyers about the regulations.
"For some people it's a fabulous deal," Tanner said, noting depending on the manufacturer buyers can get a new vehicle for $9,000.
Mills Ford made the visual point with a Dumpster with junk vehicles along Highway 371 North in Baxter. Brainerd Dispatch/Steve Kohls» Purchase reprints of this photo.
And while Minnesota dealers are selling cars and submitting the documents to the government, Tanner and Kjelstrom said not one dealer in the state has been funded yet. As of Tuesday, The Associated Press reported the government had dispensed about $17 million for 4,026 new vehicle sales.
Consumers need to take the dealer a years proof of insurance, proof of registration going back at least a year, clear title for the vehicle and the vehicle manufacturer date. With the trade-ins, dealers have seven days before they are required to ruin the engines on the vehicles designated for scrap.
Dondelinger Automotive was selling vehicles at Baxter Village in a special five-day promotional event.
Cash for Clunkers
The federal program, officially called Car Allowance Rebate System or CARS, offers an incentive to get rid of a gas-guzzler to buy a new more efficient vehicle.
Requirements on the trade-in: The vehicle must be less than 25 years old on the trade-in date, and generally it must get 18 mpg or less. So the trade-in must be a 1984 model or newer and get 18 mpg or less in the government's combined highway/city ratings.
The amount of the credit is $3,500 or $4,500, generally depending on the difference in fuel economy from the clunker to the new vehicle.
Dealers apply the credit at purchase. No vouchers are needed.
The program requires the scrapping of the eligible trade-in. The dealer must disclose an estimate of the scrap value and that value will be in addition to the rebate.
For more information, go online to www.cars.gov.
"It's just an awesome deal for the consumers," said owner D.J. Dondelinger. He agreed the difficult part for the dealers is being bogged down in paperwork, regulations and the concern the money will be gone before all the pending deals are through.
As the government tweaked requirements up to the last minute, pending deals that were sound fell through as the miles per gallon rate changed by a single gallon for certain models.
The government's Web site has been slowed by heavy traffic and Tanner said the initial response crashed the government's computer and the help line was backed up 12 hours. As of Wednesday, the federal Web site list of participating dealers did not include one from Minnesota. Both Dondelinger and Kjelstrom said if this is how the government handles the clunker program they wondered how government health care could function.
"I don't think it will last very long," Dondelinger said of the funding. "I think it will be about a week. I'd sure hate to have a toothache when the health care thing goes through."
Kjelstrom said at Aitkin Motors they are holding delivery on four vehicles they've sold through the CARS program to make sure the funds will be there for the financial credit to dealers. Kjelstrom said he wants to make sure there aren't any hang-ups in the paperwork first since the money may be gone before a missing page for example is resubmitted.
"There is a lot of paperwork involved to get funded," Kjelstrom said.
The government's Web site for the program - www.cars.gov - reports once the dealer provides the required paperwork to the National Highway Traffic Safety Administration, the dealer will be issued a financial credit in about 10 days.
The program has had side benefits. Kjelstrom said in Aitkin they've sold vehicles to buyers who were lured to the dealership by the CARS program. While those buyers didn't qualify for the program because of mileage or because they had more value in their older vehicles than they would have received with the rebate, Kjelstrom said they still bought vehicles.
Tanner said some people were bringing in up to three different vehicles looking for one to qualify. He said the old vehicles, such as a Buick Roadmaster, were cars he hadn't seen on the road for years.
Tanner said: "I don't think anybody, including myself, thought that we'd have this much interest."
The Associated Press contributed to this story.
RENEE RICHARDSON may be reached at renee.richardson@brainerddispatch.com or 855-5852.