Get cash for your clunker

BY RICK ROUAN

VINDICATOR STAFF WRITER

Jerry Mollis' 1993 Pontiac Sunbird burnt a quart of oil every month, had 225,000 miles on it and ran only about12 miles on a gallon of gas.

His car probably could have been pictured next to the word “clunker” in a dictionary. But Mollis wasn’t eligible for a federal government rebate program that seeks to stimulate the ailing auto industry and send inefficient cars to the scrap pile.

“It was runnable, but it was on its last leg,” said Mollis, a Boardman computer programmer. “It was prime candidate to get rid of and get a new car.”

The National Highway Traffic Safety Administration is set to roll out the final details of the $1 billion program today. The so-called Cash for Clunkers gives car buyers a $3,500 or $4,500 voucher to purchase a new, more fuel-efficient car when they trade in a drivable vehicle that is less than 25 years old and gets combined fuel mileage of 18 miles to the gallon or less.

The buyer must have owned and insured the car for at least a year to take advantage. Customers cannot buy a used car through the program, and the new car must cost less than $45,000. Dealers must scrap the trade-in cars.

But the program does not actually require a test of the car’s fuel efficiency. The government uses ratings on fueleconomy.gov, a Web site that has a database of information about cars, including fuel efficiency.

The Web site rated the fuel efficiency of Mollis’ Sunbird at 21 miles per gallon, disqualifying him from the program.

“I think it’s a good idea, but I wish they’d do it more on an individual basis,” Mollis said.

Mollis said that dealers should have more say in what cars are eligible because some cars are actually worse-off than the government’s rating.

“A mechanic could come out, probably in five minutes, and tell you whether this car is going to get 18 miles to the gallon,” he said.

But some area car dealers still think that plenty of car buyers will qualify for the program. In fact, one dealer said he anticipates that the $1 billion pledge from the federal government will dry up within a few weeks.

“I think the first issue is going to be running out of money. Uncle Sam is going to have to come up with more money,” said Chuck Eddy of Bob and Chuck Eddy Chrysler in Austintown.

The program ends Nov. 1, 2010 or when the $1 billion fund is all spent, whichever comes first.

Eddy said that his dealership had already set aside about a dozen vehicles with deposits for customers who plan to take advantage of the program.

Several other area dealers said they have set aside vehicles as well, and that deals could get done as early as this weekend once the federal government finalizes the voucher process.

“We don’t want them to lose the opportunity on the car they really want,” said Doug Sweeney of Sweeney Chevrolet in Boardman. He said his dealership already has set aside a number of cars in the “double-digits.”

The program is set up to help an auto industry that has been hit hard by a deep economic recession, but dealers say the industry has already started to rebound.

“Last month was our biggest new car month ever, and that’s with people knowing this was coming,” said Denny Coleman, a sales manager at Columbiana Chrysler Jeep Dodge. “We look to surpass that this month.”

Sweeney said that the threat of General Motors’ bankruptcy, the fact that the company’s Lordstown plant is a large Valley employer and the national recession combined to make selling cars difficult in Youngstown.

Still, the dealers said they expect that the federal program — formally known as the Car Allowance Rebate System — coupled with manufacturer and dealer incentives will help spur car sales, even if the program is underfunded.

But an Ohio University economist said that there is no evidence to prove that the program will help the auto industry at all.

“First of all, the billion is just a drop in the bucket,” said Richard Vedder, an economics professor at OU. “The magnitude isn’t enough to have a huge effect on the economy.”

Vedder said that the people who take advantage of the program are more likely those who planned to buy a car anyway and that the program will just drive car prices up as demand increases.

“My guess is at least half of those purchases would have taken place anyway,” Vedder said.

That was the case with Mollis, who said that he scrapped his car and bought another used vehicle when he learned he was not eligible for Cash for Clunkers.

“It was ready to go. It was a clunker, and I was ready to get rid of it,” he said. “Since I couldn’t trade it in that way, I ended up taking it to Niles scrap and got $150. Ended up getting a Pontiac G6 with 30,000 miles on it.”