Cash for Clunkers
Stimulus Program Almost Out of Cash

Cody Lusk
President , American International Automobile Dealers Association
Friday, July 31, 2009 12:00 PM

Michigan lawmakers were holding an emergency meeting this morning in the office of Sen. Carl Levin, trying to find a way to continue the federal government's week-old "cash for clunkers," program, which has proven so popular with consumers that it is almost out of cash.

Cody Lusk, president of the American International Automobile Dealers Association, was online Friday, July 31, at Noon ET to discuss the the $1 billion program, formally known as the Car Allowance Rebate System (CARS), which gives vouchers worth up to $4,500 to consumers who trade in gas-guzzling cars for more fuel-efficient models.


Cody Lusk: Hi, Cody Lusk here. Looking forward to answering your questions.


Gainesville, Fla.: If the program is continued, do you think that customers will be quicker to exhaust the additional funding now that they know that $1 billion can be gone in 5 days?

Cody Lusk: Clearly there was a lot of pent up demand from consumers to purchase new vehicles. Some of that should slow down in the coming weeks, but we hope that customers will continue to take advantage of this program.


Haymarket, Va.: I thought the total was one billion dollars, if this is true and $4,000 was the average price for a CLUNKER then the dealers have sold 250,000 cars in in few days is this correct?

Cody Lusk: That is correct, and believe me they needed these sales to boost the industry.


Gaithersburg, Md.: We went to Fitzgerald Toyota to take advantage of the Cash for Clunkers deal. We qualified for the $4,500 however, we were asked to put up the $4,500 and the money would be returned to us when the C4C goes through. We decided to just wait for the money to come in. That was a week ago. The car we want is sitting in the lot with a sold sign and we cannot take it home until the C4C comes through with the cash. On the other hand, my dad bought a car at Sheehy Ford and received the C4C on the spot. That was yesterday. What is going on and when will our C4C go thru?

Cody Lusk: It's up to the dealer to determine when to deliver the new vehicles. They are putting their own money up and waiting on government reimbursement. Some are delivering right away, while others are being more cautious.


Olney, Md.: While we don't know exactly when the Cash For Clunkers program will end, it is almost certain to end sometime this year, which will result in a sudden and probably long lasting drop in car sales. At that point, what are the dealers going to do to stimulate sales?

Cody Lusk: Unfortunately, what we have been witnessing over the past couple of years is a long lasting drop in car sales. We hope this provides an economic boost to the country and the start of an auto recovery.


San Diego, Calif.: I've heard White House spokesman Robert Gibbs say that the program will continue to run this weekend -- is that what the NHTSA is telling dealers? I was supposed to buy a car Thursday night under the CARS program, but everything ground to a halt because the dealership is getting mixed messages about whether to halt or continue the program.

Cody Lusk: Despite the incorrect media reports, the program was not suspended. The Administration has stated that all deals made before any suspension, should there be any, will be honored.


Hamilton, Va.: It appears this program was too successful. Do we have any way of knowing who benefited more, American or foreign makers. I thought from the start that the 3 mpg increase to get a rebate was way to slim. Should've required a min of 5 mpg, poss more.

Cody Lusk: Since the program benefits all automakers, the program has helped dealers of all makes.


Leesburg, Va.: Are you certain that the program will get funding to continue? Would there be more stringent requirements in the future or is it still first-come, first served? We have been looking, but we aren't ready to purchase today. We'd like to be able to do some more research in the next few weeks.


Cody Lusk: The House of Representatives may vote soon on legislation to enhance the program with funds already appropriated.


Fairfax, Va.: Apparently the clunker had to have 'original' mileage of less that 18 MPG. My '91 Corolla had 26 MPG, so did not qualify. Bottom line is that there will still be a lot of clunkers out there. Do you agree?

Cody Lusk: For purposes of this program, Congress defined a "clunker" as a vehicle getting less than 18 mpg.


New York City: I heard that the program is discontinued although no one can give me a straight answer. I want to go out and buy a car this weekend, should I forget that and did I lose my chance to take advantage of the program?

Cody Lusk: Despite inaccurate media reports, the program has not been suspended. Go buy a car today.


Jamaica, N.Y.: Any word on an extension or a modification of the current standards?

Cody Lusk: Congress is working on an extension and a vote is expected soon. The standards should remain the same.


Germantown, Md.: I would imagine that the likelihood of the U.S. government extending the CARS program would be very good. Imagine something that helps the car industry at this point in time, increases gas mileage/lowers pollution and makes most voters happy. Kind of hard to say no to it.

Cody Lusk: I agree!


New York: (Gasp) - A government program that works, and works too well? I want that man fired this afternoon! Seriously, if the money is draining away too fast, does this mean that the planners expected the program to have no impact, or to succeed only technically? Have the auto companies reported an improvement in their fortunes because of this program?

Cody Lusk: Sales are clearly up and we hope they stay that way.


Eastchester ny: Has the government created so many hoops to jump through because they really don't trust the dealers to actually destroy the so- called clunkers?

Cody Lusk: The process is very cumbersome for dealers and consumers and we are working with the government to correct some of the processes.


Alexandria, Va: Do we have any data yet on just what brands of car are being bought by those using the program?

Cody Lusk: Actual sales numbers haven't come in yet but clearly sales are up across the board.


Fairfax, Va.: There is a lot of talk online that the clunker must be completely destroyed, crushed into smithereens like in a James Bond movie.

More recently, someone told me the dealer actually runs a 'car-killer' additive through the engine until it seizes, leaving many of the other parts reusable (via junk yards, etc.).

Which is correct? And either way, will the disposal side be a problem for dealers, given the program's success and the number of clunkers?

Cody Lusk: Dealers are required to run sodium silicate through the engine to kill it before they can apply for the voucher. This is a non-negotiable requirement of the government.

And i do appreciate the James Bond reference.


Annandale, Va.: What checks and balances are there that the car sales are legitimate? The article indicates that the dealers are submitting for the money that they advanced to the individual versus the individual submitting their own claim. Medicare claims are similar and it is open to fraud for suppliers who want to submit fictitious transactions.

Cody Lusk: The government has put in numerous requirements that a dealer must meet before they can even begin to submit. Car Title in purchasers name for one year, proof of insurance for one year, registration for one year in the buyers name, buyers id, manufacturer's certificate of origin, side by side comparison of the cars (printed from and the certificate of disposal. All of these forms must copied and submitted to the government before the dealer can be reimbursed.


Washington, D.C.: Here's what Warren Brown, the Post's car expert, is saying on his chat being held now:

"As you have read in this space many times, CARS is a badly executed idea chasing two good causes -- increased vehicle sales and decreased fuel consumption. As we predicted here, it did stimulate sales. From the viewpoint of car manufacturers and dealers, that is a very good thing. But in terms of fuel conservation, it's dumb, primarily because it does what all other putative federal fuel economy efforts have done: It works only one side, the industrial side, of an equation with two sides -- industrial and consumer.

Giving consumers a rebate to buy supposedly more fuel-efficient vehicles will not save fuel. It simply reduces their cost of vehicle ownership and driving, which generally leads to more driving ...."

Cody Lusk: The program was created to stimulate car sales as well as improving drivers' fuel economy. One of the best ways to an economic recovery is through the success of the automotive industry that accounts for nearly 20 percent of all retail sales in America.


Purcellville, Va.: I heard one car dealer remark on TV that CFC was "Win-Win" -- good for the car industry, good for the economy and good for car buyers. He didn't mention taxpayers who will foot the bill for this program. As a taxpayer who bought a high-milage auto in March, I don't feel like a winner.

Cody Lusk: The dealer left out that this is a win for the environment as well. In addition, stimulated sales help local economies through sales taxes and new jobs.


Orono, Maine: I hope they put A LOT more money into this one over time and also raise the fuel economy bump needed to take advantage of it.

We had been thinking of doing this with the 12-year-old F-150 but we may be too late.

This is an amazing program, so let's keep it going!

Do you think the auto industry and unions would support a larger bump (say 7 mpg)?

Cody Lusk: You're not too late. But log off and get to your dealership!


Helena, Mont.: I called the local Toyota dealer this morning, and the salesman could not give me an answer as to whether they were still making deals through the cash for clunkers program or not (he said they have 16 deals finished but are awaiting their money from the fed).

If the House passes additional funding - -how and when will my local dealer be notified?

Cody Lusk: Unfortunately the inaccurate media reports have raised some caution flags amongst dealers and consumers. We are working to get the word out that the program is still open and hopefully will be for some time.


Washington, D.C.: I leased a new car on 6/28. I have a third car that I would consider a "clunker" that I would gladly trade in if I could get the $3,500 to 4,500 rebate. Per the CARS Web site, my current car qualifies. Can I go back and get credit if I trade in this third car?

Cody Lusk: The law applies to new car purchases and leases of 5 years or more. Your 6/28 lease would not qualify.


Re: Hoops of CARS program: I am a consumer that took advantage of the CARS program. I don't think there were many hoops to jump through, but one does need to be prepared. If people look up the requirements, gather the appropriate documents (title, insurance, registration), and show up to the dealer, it is a pretty simple process. I cannot speak to the hoops the dealer has to jump through, but we found the process easy.

Cody Lusk: That's great to hear. Thanks.


Bellevue, Wash.: Good afternoon. I am aware of the criticism about the marginal mileage increases of cars purchased under the program. Arent't there other environmental benefits, though, to newer engines? Don't they emit fewer particulates, etc.? And aren't the cars themselves a bit lighter in weight? I should think that would help overall.

Cody Lusk: You are correct. MPG is not the only environmental benefit. New cars are much greener for all of the reasons you mentioned -- and safer.


Bethesda and Not in Debt: I don't get it. So I drive a low MPG clunker that is big and comfortable and SAFE (and PAID FOR). Why the heck would I want to go into debt buying a new car?!? If I double my gas'll still take over 10 years to break the math folks!

Cody Lusk: Sounds like you've figured out what works for you. Others in different situations will find the program beneficial.


Washington, D.C.: So, this dopey incentive-warping boondoggle of a federal program is so popular that it runs out of cash much earlier than expected. How reassuring.

Cody Lusk: So is this a thumbs up or a thumbs down?


Washington, D.C.: We keep talking about the environmental impact (supposedly good) of this program, but what about the waste created by 1/4 of a million cars being discarded? Are any parts recycled or reused or did we just trade cleaner air for polluted land?

Cody Lusk: Everything but the engine can be recycled.


West Deptford, N.J.: Why the big rush for another $2B. Let's see if the program is really worth it.

Cody Lusk: We have seen in just a few days the success of the program and the consumer appetite for the program. We feel this program should be extended to fulfill its purpose of stimulating our economy and greening our roads.


Cody Lusk: Thank you for all your questions, I've enjoyed the chat!


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