Car program had a few clunkers of its own

Thinned ranks of automobiles on area dealership lots attest to the popularity of the Cash for Clunkers program.

"It worked very well for sales," said Rick Goble, Mills Motors director of operations. "It was a challenge to administer. There was a great deal of confusion but it was certainly a boost to business."

Area auto dealerships give the incentive a mixed review.

The program grabbed the attention of the public and the amount of interest overwhelmed the initial government resources of computers and employees set up to administer the program.

Goble said the ongoing rule changes made the program confusing to dealers and the public. He described the government computer system for the program as inadequate and unreliable at times.

"It was well intended, but a little short on implementation," Goble said.

Dealers were first told they needed to destroy the motor on the trade-in before it was submitted for reimbursement, potentially leaving a customer without a car if the deal failed. That was soon changed so dealers didn't have to destroy the engine until they received the reimbursement money.

Dealers were first told sale agreements would be approved in a few days and rebates paid in about 10 days. In reality, the vast majority of deals all took much longer. Some deals made in July were just reimbursed. Goble quoted the National Automobile Dealers Association's report that the program started with 30 federal employees and about 200 contract workers, which grew to nearly 5,000 in the last two weeks.

"They started with far too few of people," Goble said. "Overall, there is no question that it was a success and nobody could have estimated the kind of demand there was, and everything got overwhelmed that's just the way it was."

As of Sept. 17, the CARS program reported 511,869 vouchers had been paid for a dollar value of $2,157,430,500 with another 77,171 vouchers approved for payment with a dollar value of $324,167,500.

NADA quoted the U.S. Transportation Department report that 70 percent of Cash for Clunkers deals were reimbursed to dealers as of Sept. 16 and all dealers would be reimbursed by Sept. 30. Ford, General Motors and Honda all reported production increases in the program's aftermath.

At Mills, Goble said 99 percent of the deals were approved and 97 percent were paid as of last week with just a few stragglers to finish up.

Area dealers said their sales were significant, but not all wanted to divulge just how many vehicles they sold through the program citing competitive reasons. Dealers said the program also brought in buyers who didn't qualify for the rebate but who made purchases anyway. They said early summer business was good prior to the incentive program.

"We saw consumer confidence turning around prior to Cash for Clunkers," Goble said.

John Tanner, owner of Tanner Motors, said they have still not collected all the reimbursement funds. Last week, he said 50 percent of vehicle sales were reimbursed for the Nissan operation, 70 percent for Honda and 30 percent with Chrysler.

"It was a boost for one month we are paying for with no inventory the next month," Tanner said. "It was very poorly administered, but it was a boost for the one month."

Tanner noted the program came at a time when manufacturers cut production and dealers had previously laid-off staff. When the program started, calls increased from 178 per day on average to more than 400 per day, Tanner said.

"So you can imagine the stress," Tanner said for his staff.

"It was a great program for us," said D.J. Dondelinger, owner of Dondelinger Automotive, noting manufacturers called workers back to factories in response. "We sold a ton of cars. Everybody did."

Dondelinger said the changing rules and the reporting system were difficult. In one example, Dondelinger said if a deal was submitted and then the buyer didn't qualify, the car couldn't be sold to someone else because it was tied up in the reporting system - and there was no way to edit the report. A few deals didn't go through and the prospective buyers brought the cars back, Dondelinger said.

Now, dealerships are restocking inventory and report lots should have a bigger volume of vehicles to choose from this fall.

RENEE RICHARDSON may be reached at renee.richardson@brainerddispatch.com or 855-5852.