Cash for Clunkers: Federal incentive program is helping draw buyers to local dealerships

A display at Legacy Ford on Island Avenue helps draw attention to the Cash for Clunkers incentive program. All of the area’s new car dealers are reporting increased sales. Observer photos/CHRIS BAXTER

All three new-car dealerships in La Grande have been cheering it. They like what the program is doing for business and they don’t want to see it end anytime soon.

“It’s huge. In the last seven days of July we sold 40 cars. It’s like the old days,” said Lindon Higbee, owner of Frontier Motors on Island Avenue in Island City.

Happily, dealers are discovering that people who find out their clunker doesn’t qualify are often going ahead with a new car purchase anyway.

“There are a lot of people who were leaning in the direction of new, and this is giving them a push,” said Brent Wylam, sales manager at Legacy Ford.

In a way they haven’t since the beginning of the current recession, prospective car buyers are loosening the purse strings. Higbee said if business continues at the current brisk pace, he might even run out of product.

“We’ve sold 42, and we’ve got about that many left. I could be out of cars by the end of August,” he said.

Down Island Avenue at Legacy Ford, the situation is much the same.

Wylam said he too is running low on inventory.

While ringing up the sales, Legacy so far has gotten final approval for nearly 20 Cash for Clunkers deals. More are in the works.

“There’s an increased demand for new cars,” Wylam said. “There are more people coming in than in the past.”

Inventory is dwindling at Goss Motors on Adams Avenue in La Grande as well.

“We’re low on trucks and SUVs, and with the Cash for Clunkers program, we will be low on cars,” said Sales Manager Pat Goss.

“We’re definitely getting more floor traffic. We’ve got about a half-dozen Cash for Clunkers deals done, and more in the process.”

The program, officially known as the Car Allowance Rebate System, is a $3 billion government initiative that helps consumers buy or lease a more environmentally friendly vehicle from a participating dealer when they trade in a less fuel-efficient car or truck.

Designed to energize the economy, boost auto sales and put safer, cleaner and more fuel-efficient vehicles on the nation’s roadways, the program started with $1 billion available July 24. Funds quickly ran low, and the government added $2 billion more.

Qualified customers get a $3,500 to $4,500 discount on a new car purchase, in addition to other incentives a dealer may be offering. Those incentives range from zero-interest financing to matching discounts.

“Chrysler is unique in that they’re giving matching funds,” Higbee said. “The PT Cruiser is the most popular car in the country right now. You can get $9,000 off.”

But like any government-run program, Cash for Clunkers comes with a whole set of rules and regulations. For dealers, that’s something of a headache.

Vehicles traded in and vehicles purchased must appear on eligibility lists, for starters. In general, the trade-in must be less than 25 years old, and must be getting 18 miles per gallon or less. The car, truck or SUV  being purchased is required to meet government-set fuel efficiency standards  

There are a slew of other rules as well. At the dealerships, staff is constantly scrambling to get the paperwork done, and done right.

“You’re dealing with the government and there’s all kinds of red tape,” said Wylam. “It’s not the easiest thing, but we’re trying to make it as smooth as possible.”

Fortunately, some of the pressure let up when the government decided to add more money to the program, said Goss.

“We were going like crazy to get as many deals done as we could before the money ran out. With the extension, we can slow down and breathe a little bit,” he said.

Paperwork demands come standard with any government deal, and so too does slow payment. Higbee said that aspect of Cash for Clunkers is making him a little nervous.

“We haven’t received any money yet, and the other dealers I’ve talked to say they haven’t either,” he said. “If you do 18 or 20 of these, you’ve got a lot of money hanging out there,” he said.

Locally, the clunkers are being sent to B&K Auto Salvage, where they will be dismantled and crushed.

B&K owner Jake Hanson said the program is keeping his staff busy, and straining resources. No clunker can be disposed of until the red tape is completely out of the way. Hanson said he has one staffer doing nothing but Cash for Clunkers paperwork.

B&K will be allowed to salvage and sell some parts from the clunkers, but there are definite procedures that need to be followed.

Engines must be disabled, for one thing, and for another, removal and recycling of the mercury electric switches that come standard in older vehicles must be carefully documented. It all takes time and extra manpower.

“I can’t tell if we’re going to come out ahead on this or not,” Hanson said.

Some of the clunkers coming in are still in good running condition. Hanson said it seems a shame, somehow, to destroy them.

“The government wanted to get them off the road, but we’ll be scrapping out cars that some people would really die to have,” he said. “What’s wrong with making them available to the people who can’t afford to take out a three or a five or a seven-year loan?”

Still, there is no denying that Cash for Clunkers has stimulated local new car sales. There’s no doubt customers are walking through showrooms again, bringing with them a willingness to buy.

For local dealers, it’s like the sun suddenly coming out on a dark and cloudy day.

“We’ll take all the business we can, after all we’ve gone through,” said Higbee.