Car dealers across Colorado are reveling in the surge of new-car sales resulting from the government’s “cash for clunkers” program, but the state’s auto dealer association has recommended its members stop selling cars under the program unless the Senate approves additional funding for the popular incentive.
Tim Jackson, president of the Colorado Automobile Dealers Association, said that although the program has certainly exceeded expectations in the number of cars sold, dealers are anxious because of concerns that the program is running out of money, and computer-processing problems on the government’s website have delayed them from receiving an estimated $20 million in rebates.
Jackson said Colorado dealers sold between 4,900 and 5,500 new cars under the program, which provides rebates ranging from $3,500 to $4,500 to buyers who trade in old gas guzzlers for newer, more efficient vehicles. The state’s auto dealers originally expected to sell just 3,700 vehicles under the program.
“It’s been wildly popular,” Jackson said. “We’re going to significantly move the needle on air quality, . . . and it’ll help the economy in the process.”
However, the association announced that as of Monday, dealers should not assume that the Car Allowance Rebate System, or CARS, is reliable unless the Senate, which is slated to vote this week, acts to fund an additional $2 billion to continue the program; the Obama administration assures that the deals will be honored; or it is confirmed that the original CARS funding has not yet been exhausted.
For dealers in the Denver area, the program has been both rewarding and irksome. Auto dealer Lee Payne said the program boosted his business, but he felt a twinge of guilt when a 1994 Cadillac Eldorado was tossed in the clunker collection.
“Being a car guy and appreciating cars, I thought that’s just a shame to crush that car,” said Payne, president of Planet Honda and Planet Hyundai in Golden.
Payne said he’s made 62 deals under the program, which launched late last month. “It’s certainly been a rough 12 months, so this was some very nice and welcome relief.”
But the government’s processing website has timed out several times, which he said “creates a little anxiety.”
The website, , states that the National Highway Traffic Safety Administration will issue a financial credit to the dealer about 10 days after the trade-in is approved.
In July, Shortline Auto Group in Aurora sold 272 cars, compared with last July when it sold 230, said owner Don Hicks.
“It’s quite an increase in sales volume,” he said. “Of all the stimulus programs that the government has put forth, this is the only one that’s working.”
The automotive group has sold 50 “cash for clunkers” cars thus far. Of those, 26 were sold Friday and Saturday.
Hicks’ experience tracks with national statistics that show the “cash for clunkers” program is responsible for boosting automakers’ sales.
July auto sales rose to 11.2 million when converted to an annual rate, marking the best sales month since August 2008, according to data released Monday.
Ford Motor Co. reported its first U.S. sales increase in nearly two years.
July sales of Ford, Lincoln and Mercury light vehicles rose 1.6 percent from the same month last year. Ford sold 158,354 vehicles, a 2.2 percent increase over June figures.
Meanwhile, troubled Chrysler posted a smaller year-over-year sales drop compared with recent months, announcing that sales fell 9.4 percent. GM reported a 19 percent decline, far less than in past months.
P.J. D’Amico was among the customers happily capitalizing on the program. He traded his 1998 Mercedes M Series SUV for a 2010 Subaru Outback Legacy.
“It was fantastic. I have no regrets that it’s gone,” said the 41-year-old D’Amico. “The (program) helped to expedite what I was originally trying to do, and I was able to get $4,500 toward a reliable car.”
The CARS program was approved by Congress in early July and expected to last through October. It has been so popular, however, that it’s nearly blown through its original $1 billion budget.
The House of Representatives has voted to allocate another $2 billion, but the Senate has to approve the plan as well.
The Associated Press contributed to this report.
Sara Castellanos: 303-954-1381 or scastellanos@denverpost.com
Charities fear pinch from program
Area charities reliant on car donations for funding say the government’s “cash for clunkers” program might hurt them.
Officials at one charity that benefits from the proceeds generated from donated cars say the government’s offer of up to $4,500 for a car can draw would-be donors away.
“If the government is going to give them a chunk of change for their clunker, then we’re concerned that they’re not going to come to us any longer,” said Meaghan Carabello of Goodwill Industries Denver.
Higher-quality, drivable cars are preferred, but Morrow says even the oldest of cars — the clunkers — can be sold for parts or reconditioned and sold at auto auctions.
Last year, Goodwill and Cars Helping Charities, the third party that takes in the donations and sells them, took in 1,900 and 3,000 donated cars, respectively.
For Goodwill, that translated to about $220,000 in revenue.
It’s still too early to tell the impact the federal program has had on charitable giving, Carabello said. 9News
