The Cash for Clunkers program has brought prospective buyers into local auto dealerships in droves, but some dealers are worried because they have not yet been reimbursed for their participation in the program.
Robinson Brothers Ford sold about 30 vehicles through the program, raising their profit margins by 20% to 25% since it began July 1. The worry is that the $150,000 the dealer has fronted to make the purchases possible will not come through from the federal government, says Chris Savage, general manager at Robinson Brothers.
“We’ve acted in good faith,” Savage says. “If we’re not funded for the first deal soon, we’ll have to limit our exposure and cut back.”
A slow reporting system and 136 pages worth of changing rules have hampered the process significantly although there has been a tremendous response, says Mike Venable, general manager at Brian Harris Chevrolet. Brian Harris sold close to 40 vehicles through Cash for Clunkers and increased profits by 30% to 40%.
“Submissions in the system are a nightmare,” Venable says. “It’s a tough program, but it was intended to stimulate business. It’s achieved its purpose.”
Savage says that Ford F150’s and Escapes have been popular, while Venable says most higher-end gas mileage vehicles such as the Chevrolet HHR, Cobalt and Malibu are popular picks.
Bob Israel, president of the Louisiana Auto Dealers Association, says that the program has been a tremendous success in both getting vehicles with low gas mileage and high emissions off of the road as well as providing a much-needed boost to auto dealers. Slow sales prior to the program means that auto dealers might not have the extra cash to put toward continued participation.
“They may face a choice of whether or not they can afford to continue in the program,” Israel says. “The benefits of the program are enormous. I think it’s frustration that they are suffering from now.”
There are 320 auto dealers in the state and Israel says he estimates an average of 25 cars sold under the program at each dealer.
