Biggest problem has been keeping up with demand for new cars
KINDERHOOK–Clunker deals have motivated buyers, here and around the nation, who wouldn’t have bought a new car without the government’s help. This has lifted the auto industry out of a drastic 35% slump in sales in the first half of 2009 and pumped money into the local economy too.
The seasonally adjusted selling rate for July jumped to 11.1 million compared to 9.5 million in June. About a quarter of a million cars were sold in the first few days under the program.
“This is the first time somebody has offered a program that helps me in my life,” says Michelle Debye-Saxinger of Kinderhook, a teacher who bought a Jeep Patriot from Village Dodge on Route 66 under the clunker program. “I drive a Jeep that has 215,000 miles on it, but I have two kids in college and we need a new roof. I was not in the market for a new car.”
Ms. Debye-Saxinger figured she would realize $8,000 in rebates; $3,500 from the government Cash for Clunkers program and a $4,500 match from Chrysler Corporation.
Her experience demonstrates just how ungainly the process was in the first days. Three days into the Clunkers program on a Monday, Ms. Debye-Saxinger went shopping at Village Dodge and bought the “last Jeep Patriot within 300 miles.” (A side effect of the clunker program is that manufacturers are now short on inventory.) “I drove it and loved it, turned over my clunker and bought it.”
Or so she thought.
Her new Patriot was scheduled for delivery that Wednesday, outfitted with a tow package. That same day she hit a deer with their other car, a Mazda,
leaving the family another car short.
On Thursday she went to pick up her new car and was told her there were so many cars ahead of hers for inspection they couldn’t make the deal. The dealer gave her a loaner to get her through.
The government and the companies they hired to administer the program (Oracle and Citigroup) were completely unprepared for the response. “They must have been expecting one deal per state per month,” says Jerry Flint, Forbes Auto Columnist.
On Thursday night she got a call to say that her deal had been temporarily suspended. Ms. Debye-Saxinger was in limbo. She’d given up her plates on the Jeep and transferred her insurance to the new car. She didn’t have her new car and wasn’t sure she’d ever get it. Village Dodge was apparently in government paperwork hell and didn’t want to tell the customers to whom they’d sold cars. Finally her salesman told her the government had run out of money, they didn’t know when she’d get her car, they didn’t know what she should do with her loaner car and they had more papers for her to sign. She got a lawyer.
The following Monday, she called to confirm that her new car was ready. “I went in that afternoon to pick up my car and they couldn’t find my paperwork,” says Ms. Debye-Saxinger, “but finally I got my car.” The next day she got a call from the dealership saying they needed the title to her clunker–the title she’d try to give them several days before.
So goes just one clunker story among the hundreds of thousands. But whatever the trouble, it’s a happy ending. She has her Jeep.
Things got particularly sticky with dealers. They didn’t know what size bag they were holding. Ed Habeck, owner and general manager of the Toyota dealership in new facilities on Route 9H in Ghent said that his dealership had already seen a boost in sales because of the new showroom.
“When the program came on, we did generate a lot of business, and these were new people we’d never seen before. With Toyota, you have a lot of repeat customers,” says Mr. Habeck, “but the clunker program is bringing in new faces.” Top selling models at Kinderhook Toyota have been the Corolla, the Prius and the Camry.
But processing the paperwork has taken unexpected hours of work. “With computers crashing and applications returned from the government, it has been a time-consuming and frustrating experience,” says Mr. Habeck.
According to the American International Automobile Dealers Association (AIADA), as of August 6 only 1,600 of the 219,000 deals submitted had been paid. More than 14,000 transactions had been accepted and ready for payment, and another 14,000 were in draft status.
The 219,000 deals scooped up almost a full billion dollars; Congress has approved another $2 billion for the program. That money is expected to run out by November 1, according to Automotive News.
Despite problems, it is, as Ms. Debye-Saxinger says, a program that gives overburdened taxpayers a meaningful leg up.
For more information on the program go to the National Highway Traffic Safety Administration website, www.cars.gov.