Clunker deal boosts area sales

LAKE COUNTY -— After the Cash for Clunkers program run by the federal government came to a close on Monday, local car dealerships have claimed the initiative a success.

Don Aadsen Ford and Ronan Dodge participated in the program with resounding results.

Don Aadsen general manager Eric Hendricksen said the Ford dealership sold 11 cars, while Nick Pierce at Ronan Dodge reported “half a dozen” sales under the initiative,  which entitled buyers up to $4,500 in government money when trading in their “clunker” for a new, more fuel efficient car.

“There were many others, beside the 11, that came in and couldn’t utilize the program for a variety of reasons,” Hendricksen said. “The Ford Focus, Fusion and Escape were all popular until we had inventory run out.”

Pierce also found potential buyers had “a lot of hoops to jump through” before being eligible for the government-funded discount. The program required that the new car must get better than 10 miles per gallon than the qualifying “clunker” potential buyers brought in. If the vehicle met this and other standards, they would receive up to $4,500 off a new vehicle, courtesy of the federal government. Hendricksen said it was then up to the dealers to have the “clunkers” engines disabled within a week, and the vehicle crushed within four months of the dealer receiving the rebate money from the government.

“We must do the title work and buy sodium silicate to blow out the engine, but it is not too expensive or time consuming,” he said. “We get about $50 from the junk yard for the vehicle, so it almost evens out.”

An issue that did sprout up as a result of the program is the overwhelming response dealers nationwide received from buyers. Originally set to receive $2 billion from the government budget, the program (formally known as CARS — Car Allowance Rebate System) was given another $1 billion, with the expectation that the funds would last until Labor Day. Instead, the U.S. Department of Transportation announced the last forms would be accepted at 6 p.m. MST on Monday, after more than 625,000 applications nationwide were turned in for government refunds.

But during the program, Hendricksen was pleased with the attitudes he saw of potential buyers at the dealership.

“It created a good selling environment,” he said. “It brought lots of buyers and traffic to the lots.”

The overwhelming success may explain the major backups in receiving rebates from the government. Pierce said Ronan Dodge hasn’t received any refunds as of Monday for the cars they’ve sold. Hendricksen said he’s been paid for three of the applications he has sent in to the government; he hopes to be paid in full by the end of September.

“It takes them between 14 and 18 days to look at the application for each car, on a first come, first serve basis,” he said. “It’s taking a little while to actually get paid on these.”

And the increase in sales led to depletion of new inventory fairly quickly, as the recession has slowed the pace of new cars coming off the factory lines.

“Now we are out of a lot of new inventory, and the pipeline is kind of empty,” Hendricksen said. “Nothing is ready to be replaced in the lots.”

Pierce agreed, saying that new inventory may not hit the Ronan Dodge lot until November.

Despite some minor setbacks, it seems the program was a success. Overall, Hendricksen was happy with the summer sales spurt the program created, and hopes the effects linger.

“From a dealer standpoint, I’m glad to see it done,” he said. “In the long term, I think it’s taken some of the fear and skepticism out of the buyers.”

Mission Valley Auto, a Chevrolet and Pontiac car dealership in Polson, did not participate in the “Cash for Clunkers” program.

Jeff Kelly of MVA said the dealership is waiting for newer models to fill the lot. 

“It will be a little while as we wait for new 2010 models,” he said.

He believes new vehicles may be on the lot in September.