Clunker Owners Seek Last-Minute Trade-Ins as Program Winds Down
Monday, August 24, 2009
Customers looking to take advantage of the U.S. government's "Cash for Clunkers" trade-in program hit car dealerships over the weekend, trying to get in before it ends on Monday.
Brent Berger, 50, of Potomac, was out with his family Saturday afternoon to trade in a 1997 Dodge minivan with 130,000 miles for a Honda Accord.
"My wife told me to come in, and it's a good deal," he said. "It's getting old cars off the road and putting more fuel-efficient cars out there. It was an opportunity that showed up, so why wait?"
The program allows consumers to trade in gas guzzlers for a voucher worth up to $4,500 toward the purchase of a new vehicle. Dealers must essentially front the money until they are reimbursed by the government, and many have yet to receive those reimbursements.
Many dealerships stopped accepting clunker trade-ins on Friday or Saturday because they were worried about getting their paperwork submitted before the program ends at 8 p.m. Monday. The $3 billion program was expected to last until Labor Day, but the government said late last week that it was shutting it down because most of the money has been spent and it needs to process paperwork to reimburse dealerships.
The program has helped dealerships lower overstocked inventories, but some popular cars made by Toyota and Honda have been hard to find. That has forced some automakers to increase production and call back laid-off factory workers.
Herson's Honda in Rockville started July with 550 vehicles. A few weeks into August, it had fewer than 200 because so many had been sold under the clunker program.
But William K. Andrakakos, general manager at Herson's, said he is concerned about when the government will repay him. The government has applications for nearly half a million cars and it takes a while to process the forms, he said, adding that it could take several months before he is paid the $1 million he is owed.
While Andrakakos said he can afford to front the money, "a million dollars is a million dollars."
Other dealers worry about whether the clunker program will be more than a shot in the arm to the slump in vehicle sales. They say that in the fall and winter, when car sales tend to be slow anyway, there may be even fewer buyers because they have already bought cars under the clunker program.
Kevin Farrish, who runs two dealerships in Fairfax, said that while the trade-in program brought much-needed sales to the auto industry, he is worried that it lured customers who had planned to buy later in the year. Whether that will translate into a pent-up demand of new customers in the coming months is unknown, many dealers and auto industry analysts said.
"None of us have a crystal ball," Farrish said. "It brought a lot of business forward that we weren't naturally going to see in the next year or two years.