'Clunker' Rebates Stir Car Buyers

By ALEX P. KELLOGG and JOSH MITCHELL

The first weekend of "cash for clunkers" rebates boosted new-vehicle sales, despite minor snags and worries the program might not have a long-lasting effect.

On Monday, Daryl Little turned in his dusty 1995 Chevrolet Silverado pickup truck with 362,000 miles at Cook Chevrolet Pontiac Buick in Vassar, Mich., and drove off with a new, 2009 Silverado that qualified for the rebates because it gets much better gas mileage than his old one.

Mr. Little said he would have been lucky to get $1,200 for his old truck and wouldn't have had the money to buy the new one without the $4,500 clunker rebate. "I thought I'll never get a better deal," the construction-company manager said.

A sign advertises the government's cash-for-clunkers sales incentive at Tropical Chrysler Jeep in Miami Shores, Fla. Dealers reported strong sales over the weekend by buyers seeking the up to $4,500 allowances.

It is unclear, however, whether the $1 billion program -- officially the Cash Allowance Rebate System -- is going to boost sales over time or merely pull forward purchases by customers planning to buy new vehicles in the weeks or months ahead. The program is due to expire Nov 1.

"I don't think this is permanent by any means," said Emir Abinion, a former Ford dealer who owns two Volkswagen dealerships in suburban Chicago. "It's just a shot in the arm...I don't know one dealer who would think this will be a catalyst for sales."

George Fowler, a Pontiac-Buick-GMC dealer in Dearborn, Mich., said he has made seven sales so far through the program. More than 30 people have come in hoping to buy, but most didn't meet the qualifications. Most of those participating, he said, would likely have bought a new vehicle in the coming months regardless of the discount.

"These are people who would have been in the market anyway, and they have a trade that was worth $1,500 and now is worth $4,500," he said.

Under the program, new-car buyers can get $3,500 or $4,500 in rebates when they trade in older vehicles for more fuel-efficient models. The program was passed by Congress and signed into law by President Barack Obama in June, but the rules and details were only laid out Friday by the National Highway Traffic Safety Administration.

The White House is counting on the rebates to spur vehicle sales at a time when auto makers have been hit particularly hard by the recession. U.S. auto sales are on pace to total about 10 million vehicles, down from about 13 million in 2008 and 16 million in 2007. Boosting new-vehicle sales would also help the administration's efforts to turn around General Motors Co. and Chrysler Group LLC.

Nearly 16,000 auto dealers signed up to participate in the program, and a government hotline has handled more than 45,000 calls from people seeking information, a Transportation Department spokeswoman said. A Web site for the program registered 1.5 million hits since Friday.

A few glitches have appeared. Some dealers said junkyards in their area are ill-prepared to handle the influx of older cars expected to be scrapped. Others said the 136-page instruction manual provided by the government is confusing. Some consumers have been disappointed their cars don't qualify. The NHTSA Web site where dealers must register to participate crashed for a time on Friday due to heavy use.

But the program is bringing car buyers into showrooms, said dealers. At Paragon Honda in Queens, N.Y., General Manager Brian Benstock said he started working out clunker trade-ins before the program's official launch and has sold 50 cars this month, including eight over the weekend.

Few older Hondas qualify for the program given their fuel-efficiency, but it has been a bonus for
foreign auto makers, he said. Many of the vehicles turned in are GM and Ford pickups, he said. "This has all been a market-share gain for us," Mr. Benstock said.

Steve Cook, owner of the Michigan dealership where Mr. Little bought his new Silverado, said the past weekend was the busiest he has had in months. "I'm going to sell in a week what I sold in a month."

Mike Adamson, who owns three franchises around Rochester, Minn., has seen the clunkers program triple overall sales at his Lincoln Mercury, Hyundai and Chrysler Dodge dealerships. On Monday, his dealerships had sold 50 vehicles that were awaiting final government approvals.
"It's way more than I could have anticipated," said Mr. Adamson.—Sharon Terlep, Matthew Dolan and Jeff Bennett contributed to this article.

Write to Josh Mitchell at joshua.mitchell@dowjones.com Printed in The Wall Street Journal, page B2

Important Things to Know About the CARS Program (Cash for Clunkers)

• The CARS program begins on July 1, 2009, and will end on November 1, 2009, or when the funding set aside for it has been spent, whichever comes first. However, guidelines and processes will not be finalized by NHTSA until approximately July 23, 2009

• The trade-in vehicles are not allowed to be resold by the dealer. They must disposed of in a manner that ensures they will never be driven again (i.e., crushed or shredded). However, parts from the vehicles, other than the engine block or drivetrain, may be sold prior to disposal

Trade-In Vehicle Eligibility
• Must be in driveable condition
• Must be less than 25 years old on the trade-in date (built in 1984 or later)
• Must have a combined city/highway rating by the EPA of 18 mpg or less. This rating can be found by visiting the http://www.fueleconomy.gov/ web site
• Must be continuously registered and insured to the same owner for at least the full year preceding the trade-in New Vehicle Eligibility
• Only the purchase or lease of new vehicles (model years 2008, 2009 and 2010) qualifies
• The new vehicle is required to have a minimum combined EPA rating of 22 mpg (cars) or 18 mpg (light-duty trucks)
• The new vehicle must have a Manufacturer’s Suggested Retail Price (M.S.R.P.) of less than $45,000
• There are two tiers of credit based upon the degree of improvement in combined city/highway mpg rating from the trade-in to the new vehicle

• The new vehicle credit provided under this program must be used in addition to any other offers currently available from the manufacturer and/or the retailer. The retailer may not use the credit to offset any rebates, discounts, etc.
• The CARS credit can also be used in combination with the hybrid tax credit, which allows consumers to claim a federal income tax credit of $1,550 if they purchase a 2008/2009 VUE or 2009 AURA, or $1,300 if they purchase a 2008 AURA. See http://www.fueleconomy.gov/ for details

Crediting the Customer & Retailer Reimbursement
• Customers do not need a voucher to receive the CARS credit for their eligible purchase
• Retailers should apply the appropriate credit amount at the time of purchase
• Retailers must then apply for reimbursement from NHTSA by submitting sufficient documentation to demonstrate that the transaction was eligible, the trade-in vehicle was disposed of and that all requirements of the final rules were met
• It is anticipated that the Retailer will receive the NHTSA reimbursement, via electronic transfer, within approximately 10 days of the request submission — assuming all program requirements have been met.

See if you car qualifies by visitin one of our web sites http://www.saturnofasheville.com/, http://www.saturnofgreenvillesc.com/, and http://www.saturnofspartanburg.com/ click on the GM CARS blue logo on the bottom left of the page.

Government Launches ‘Cash-for-Clunkers’ Website

Government Launches ‘Cash-for-Clunkers’ Website
by Joshua Duval

The National Highway Traffic Safety Administration (NHTSA) launched the website for its ‘cash-for-clunkers’ incentive program yesterday, despite the continued uncertainty regarding how the program will be implemented.
After passing through both chambers in Congress, the cash-for-clunkers legislation was attached to a war-time spending bill and signed into law by President Barack Obama last Thursday. The government has appropriated $1 billion to the program, enough to replace about 250,000 clunkers with new vehicles.The website for the program, located at www.cars.gov, has been dubbed the “Car Allowance Rebate System.” It provides general information and links relevant to the program, but is short on specifics. A generalized flow chart of how the program will work confirms that the program will run through dealers, and implies that payments will be made directly to dealers. The diagram also says dealers will have to wait about ten days for NHTSA to approve transactions and issue the financial credit.The site also contains a link to the government’s fuel economy rating site, and a copy of the actual legislation that created the program.Analysts have been skeptical about how effective the program will be. Funding for the program was dramatically reduced, from an envisioned $4 billion (enough for about 1 million rebates) to one-fourth of that, and the current delay in finalizing the program’s details means it won’t take advantage of the typical summer buying rush. In addition, many believe the owners of cars that qualify for the program won’t be able to afford to buy new cars – even with the available $4500 rebate.