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Dealers Hope to Get More Mileage Out of 'Clunkers'
House Approves $2 Billion to Keep Plan Running

By Dana Hedgpeth and Thomas Heath
Washington Post Staff Writers
Saturday, August 1, 2009

Wearing skin-tight, blue plastic gloves to protect his hands, Brad Brooks poured the liquid poison into the engine of a Ford Bronco, putting the 1992 sport-utility vehicle out of its misery.

It was quickly rendered dead Friday, and in exchange, the SUV's owner received $4,500 toward a new, more fuel-efficient Toyota Tacoma pickup at the Darcars Toyota Silver Spring dealership, courtesy of the U.S. government's "Cash for Clunkers" program. The plan was designed to stimulate auto sales in a sour economy, improving the environment along the way -- the gas-guzzling trade-ins must be scrapped rather than resold and put back on the road to pollute another day.

The program was so popular in its first week that it almost ran out of money. After an evening of confusion Thursday, the House hurriedly convened Friday and provided an additional $2 billion to keep it going. Senate leaders hope to bring the bill up next week. Meanwhile, the clunkers are lining up.

"We poured it into that Dodge and it killed it in eight seconds," said Brooks, pointing to another vehicle as he put down the half-gallon jug of liquid called "Clunker Bomb." The chemical is sodium silicate. In red lettering on the bottle, it reads, "Engine Grenade," and there's a skull and crossbones over the profile of a car.

Brooks, the service director at Darcars Toyota, surveyed the clunker haul, rounded up by the dozens in the corner of a sprawling, fenced lot: rows of old Jeep Grand Cherokees, Mercury Grand Marquises, Chevy Suburbans, a Mercedes station wagon and even a sleek, musty-smelling 1991 Cadillac Brougham with 130,000 miles and worn-out, old-fashioned, chrome push buttons next to the driver's seat.

The Darcars dealership, like thousands of others across the country, has been swamped with customers coming in to trade their old vehicles for new cars since the government began touting the program last month. But the effort has been beset with problems since its formal launch July 24.

Dealers and customers said they were confused about which cars and trucks qualified as clunkers, saying the requirements were not spelled out clearly enough. The program's official Web site buckled under a flood of requests to process transactions, leaving dealerships uncertain about whether the sales qualified. And some car sellers say they are out as much as $1 million because the government has been slow to process reimbursements.

Disaster loomed Thursday evening when it looked as if the program -- which was scheduled to last until Nov. 1 or until its money ran out -- was nearly out of cash. Transportation Secretary Raymond H. LaHood said that the program would be suspended at midnight Friday, drawing a flurry of calls from auto dealers and Michigan politicians seeking to save it. They argued that the program was the best thing to happen to the sputtering auto industry.

"What this deal does is it creates a sense of urgency," said Scott Gruwell, owner of Chevrolet dealerships in Phoenix and San Diego. "It pushes people on the fence to get into a new car. We need to move inventory so we can buy more from the factory." He has sold 45 new vehicles through the program, and spirits are high among salesmen and customers alike, he says.

"One billion dollars for a freeway project takes a while to trickle down," he said. "This is moving iron. It's moving cars. This is quick, fast stimulus."

So far, only 40,000 trade-in applications have been filed, according to a congressional official. But dealers say that paperwork for many clunkers sitting in their lots has not yet been processed by the government. Federal transportation officials told congressional leaders that 200,000 forms still need to be processed, according to results of a survey of dealers involved in the program.

When dealers got e-mail notices from manufacturers telling them "Cash for Clunkers" was endangered, they rushed into action. At Darcars Toyota, general sales manager Ethan Rossignol said that on Thursday night he and his staff called dozens of customers who had been thinking about buying new cars, warning them that the rebates, of $3,500 to $4,500, might disappear at the stroke of midnight.

The office lights burned until 2:30 a.m. Friday as the sales staff closed deals. By late Friday afternoon, they had taken in 111 clunkers -- selling 111 new cars.

Brian Benstock, a Honda dealer in Queens, said he started telling customers in his packed showroom, "Fish or cut bait," as midnight approached on Thursday. One customer brought in a 1997 Mitsubishi Diamante at 10 p.m. and could not decide what he wanted. "At 11:55 p.m., we told him, 'The hourglass is closing,' " Benstock said. At 1 a.m., the customer drove off in a brand-new Honda CRV.

On Friday, lawmakers hastily drafted a bill amending the already-passed stimulus package to channel funds intended for energy loan guarantees into the clunkers program. Congress will seek to replenish the energy program at a later date.

The Cash for Clunkers program, formally known as the Car Allowance Rebate System (CARS), was passed by Congress in mid-June to help the flagging U.S. auto industry and launched with $1 billion in funds.

Few expected it to be so popular, so fast. But some dealers say there is pent-up demand. The U.S. auto industry had been selling 17 million cars a year, but this year it expected to sell 10 million. "The clunker customers have been hanging on for years and all of a sudden someone is giving them an opportunity to get a newer car," Benstock said.

Bob Grimm, a 64-year-old retired Defense Department worker who lives in Columbia, went to Darcars Toyota last week and then researched prices online. He returned Friday and made the deal, trading in his 1996 Chrysler minivan with 176,000 miles. With the $4,500 voucher, plus rebates and other negotiated discounts -- he bought a 2010 Toyota Corolla for $11,370. The suggested retail price was $18,505.

"That's why I couldn't resist the deal," Grimm said. "It was $4,500 off the $15,870 price."

Congressional leaders from Michigan on Friday questioned officials from the Transportation Department about how the program is administered, whether dealers are reimbursed in a timely fashion, and on technical glitches that have made it difficult to determine how many exchanges have taken place and how much money has been paid out.

It is unclear how long the new infusion of $2 billion will last because there has been such a flurry of interest in the past week, though some dealers say they expect it to die down.

Vince Sheehy, president of the 40-year-old Sheehy Auto Stores, which has 14 dealerships in the greater Washington area, said he spent about $270,000 to run the clunker program, which required advertising, chemicals to kill engines and other administrative costs. He has taken in 260 clunkers but has yet to receive the roughly $1 million he says the government owes him. His staff recently spent eight hours on the government's Web site trying to process one claim. Still, Sheehy is optimistic.

"We finally have something that's really working," he said. "The last thing we want to do is cancel it. It's doing what it was intended to do -- stimulate the economy."

Staff writers Sholnn Freeman, Ben Pershing and Scott Wilson contributed to this report.

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