Valley dealers await rebates for Round 1 of ‘cash for clunkers’

BY RICK ROUAN

VINDICATOR STAFF WRITER

President Barack Obama has signed off on a $2 billion refill to the “cash-for-clunkers” program, but some area car dealers say they haven’t received rebates from deals in the first round of the program.

“Very few dealers across the state of Ohio have received any reimbursement from the government,” said Steve Chos, executive vice president of the Automotive Dealers Association of Eastern Ohio. “It’s akin to musical chairs. You don’t want to be there without a chair when the music stops.”

Since the program began, dealers have submitted more than 245,000 transactions to the tune of $1.03 billion, according to data the National highway Traffic Safety Administration released Friday.

Only Michigan and California have requested more dollars than the $37 million that dealers in Ohio requested through Tuesday.

The fact that not all of those requests have been paid out, coupled with a faulty filing system, has left some dealers gun shy about letting customers drive off the lot, Chos said.

Chos said the federal government Web site has been plagued by problems and that dealers were worried about reports that the program could be suspended.

“Without the guarantee that those funds would be available, I think dealers pulled back on the promotion of the program,” he said.

But the latest infusion should restore some confidence in the program, officially known as the Car Allowance Rebate System, which was established to stimulate an ailing auto industry and pull inefficient vehicles off the road. Customers could get a $3,500 to $4,500 rebate from the federal government for trading in a drivable car with fuel efficiency of 18 miles per gallon or less. The vehicle must be less than 25 years old and the owner must have insured it for at least one year.

The program was set to last until Nov. 1, but funds began to dry up this week, prompting the federal government to throw it a $2 billion lifeline through Labor Day.

“I don’t know if it will make it that far. The response has just been crazy,” said Mark Fabian, sales manager at Greenwood Chevrolet in Austintown.

Greenwood has processed 50 to 60 clunkers, Fabian said, adding that he was reluctant to make deals while reports swirled that the program could be discontinued.

While senators argued about the merits of the program, Fabian said he was restocking his depleted inventory. He said the dealership added a handful of Aveos, a few trucks and 20 Cobalts to meet demand.

Fabian said that his dealership has not received any rebates yet from the federal government, but it has let customers drive off the lot in new cars after signing an agreement to either return the car or pay the difference if the funds never come.

But other dealerships are being more cautious.

At Donnell Ford in Boardman, customers have put deposits on cars and traded in clunkers, but they’re not driving off the lot until the government money arrives, said Don Murphy, general manager.

“There’s nothing worse than telling a customer, ‘Hey, you’ve got to bring that back,’” he said, adding that the dealership has not been approved yet for any of the 50 to 60 deals it submitted.

Sweeney Chevrolet in Boardman is taking the same approach, said Doug Sweeney.

The dealership wanted to protect itself and the customer from having to return the car, Sweeney said, adding that “a deal isn’t a deal until we deliver the car.”

Murphy said that the program will have a chain effect on the economy as inventories shrink.

“I don’t know if people realize that when you put money into people’s pockets, they’re going to spend it,” he said. “The manufacturers have to revamp their buildings and businesses and start building more cars again. ... It brings people back to work.”

General Motors and Ford vehicles represent more than a third of the new vehicles purchased under the program. The Ford Focus, Ford Escape and Chevrolet Cobalt are among the top 10 vehicles purchased through “cash for clunkers,” according to government data.

“It’s a huge snowball effect that really helps a lot of people,” Murphy said.