Clunkers Program Clears Out Car Lots

By Dana Hedgpeth
Washington Post Staff Writer
Wednesday, August 12, 2009

Car buyers flocking to trade in their clunkers have stripped dealerships of inventory over the past two weeks, giving automakers a signal they have eagerly awaited: It's time to make more cars.

Customers who have heard accounts of overflowing showrooms have been frustrated to find few cars when they show up ready to buy, but auto industry experts said this is exactly what automakers need.

Before the government's Cash for Clunker program sparked demand, Chrysler dealers had piled up unsustainable inventories to last roughly 100 to 120 days, according to Kathy Graham, a Chrysler spokeswoman. Now, she said, the supplies average 45 to 60 days in large part because of the clunker program.

"Now we're not just building to build," Graham said. "We're getting customer orders. We're getting dealer orders. That's the right thing for the company to do."

Before July 24, when the government began offering vouchers of up to $4,500 to entice owners of old gas hogs to trade up for new fuel-efficient cars, mostly Camrys and Corollas were tightly parked in 400 spaces at Koons Toyota on Leesburg Pike in Tysons Corner. Now there are dozens of empty spaces. The overflow garage with 500 spots is filled with clunkers, customers outnumber salesmen and the usual supply of 15 to 20 Priuses is gone. Instead, there's a waiting list of 50.

"We're selling cars as fast as they can come," said Bill Oakes, a Prius salesman. "It's tiring. We're all exhausted."

Toyota said it plans to increase its production by 65,000 vehicles. Of those, about 8,000 would come to the mid-Atlantic region, said Tammy Darvish, who owns more than two dozen dealerships in the Washington region. But it will be several weeks before she and other dealers see them on their lots.

On Monday, Jackie Connelly, a 44-year-old mother and secretary for the U.S. Postal Service who lives in Woodbridge, called Koons Toyota and was told they had three Corollas. When she arrived Tuesday for a test drive, two were left.

As she tried out the metallic blue car, another salesman asked about it for another customer. "Sorry, it is sold," said Connelly, and traded in her 1996 Ford Ranger with 172,000 miles. With a $4,500 clunker voucher, rebates and other deals, she ended up paying roughly $14,000 compared with the nearly $18,000 list price.

"I wouldn't have been able to afford a new car without the clunker rebate," she said, as she took the keys.

Alex Perdikis, executive vice president of Jim Koons Automotive Company, said the 16 Koons dealerships in the region have taken in 980 clunkers. "Inventory is coming in, but it is not coming in at a pace where we can sustain this sales rate," he said. "This thing, in terms of stimulus, has been the best thing I've seen."

Koons Toyota had 200 new vehicles on the lot at the start of August. As of 1:38 p.m. Tuesday, there were 79. Koons Chrysler in Tysons had 11.

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