johnnymk
08-09-2009, 09:15 PM
http://www.greenvilleonline.com/article/20090809/NEWS/908090314/1004/NEWS01
The federal government approved its cash-for-clunkers sequel last week, and supporters hope the $2 billion new installment will continue the surge in auto sales and boost demand for fuel-efficient vehicles.
The incentive program, begun last month, has been a boon to Upstate car dealers and consumers, generating much-needed sales for dealers and significant savings for car buyers.
But as they prepared for the extension, there was concern about the government's ability to handle the process of reimbursing dealers for the new-vehicle purchases and what happens to the industry once the program ends.
Ed Rich, general manager of Dick Brooks Honda in Greer, said his business sold between 45 and 50 vehicles in the first phase of the program, but has yet to receive any government allowances.
The program appears to be such a success that electronic paperwork has bogged down computer systems, slowed the government's payment process and created stockpiles of old vehicles that won't be scrapped until dealers receive their allowances, Rich said.
“That's been the real stressing part — is just having someone sitting there trying to dot every ‘i' and cross every ‘t' and get those in,” he said. “We've got them in, but there's no approvals, no money has been transferred to our account and we've had nothing to tell us that they've been turned down.”
“I think that the dealer network in the country would feel great if they (federal officials) would just get enough people there to look at those documents and have the expertise to not spend a day looking at them, but look at them and say, ‘It's OK, it's OK, it's OK. Pay them,'” Rich said.
Officials with the National Highway Traffic Safety Administration, which is governing the clunkers program, couldn't be reached for comment.
Officially known as the Car Allowance Rebate System, it received an additional $2 billion Friday, when President Obama signed into law legislation extending the program.
Obama welcomed the extension, saying it would aid economic recovery and help the troubled auto industry.
Supporters also have hailed the program's effects on reducing carbon emissions.
Some skeptics, however, say the additional funds won't have the same impact as the first $1 billion, because many people who qualified for the program already have bought new cars and the supply of eligible vehicles is waning.
The program gives consumers up to $4,500 in federal subsidies for trading in cars that get less than 18 miles per gallon and buying new cars with better fuel economy.
Dealers are later reimbursed by the NHTSA.
The Automotive Aftermarket Industry Association also weighed in last week, saying routine vehicle maintenance for a year costs a consumer less than a monthly new car payment and would be more successful in reducing gasoline use and pollution than the clunkers program.
Vehicle maintenance would save consumers $30 billion in gasoline a year versus the government spending $3 billion in taxpayer dollars to buy new cars, the association said.
The trade group represents more than 100,000 repair shops, parts stores and distribution outlets.
As part of the clunkers program, federal officials provide a credit voucher to consumers trading in their older cars, either domestic or foreign models, when they buy or lease eligible new vehicles.
“People are doing exactly what the program said it was going to do,” said David Thomas, senior editor for Cars.com, on an online site for car shoppers that is owned by Gannett Co. and four other media companies. “They are actually turning in these large SUVs and these trucks” and shifting toward more fuel efficient mid-sized sedans and compact cars.
While there are good deals on some models — with significant cash back from dealers on top of the cash for clunkers incentive — sales of cars such as the Toyota Prius are spiking without rebates and price discounts, he said.
With lenders imposing much tighter credit conditions on consumers in the last 18 months, “Hopefully these people are not getting in over their heads, they're not buying more than they can afford,” Thomas said.
Rich, the general manager in Greer, said new-car buyers are choosing Honda Civics and Accords, while auto industry officials say other popular models include the Chevy Cobalt, Dodge Caliber, Ford Focus, Hyundai Elantra, and Toyota Corolla.
Despite the sales jolt provided by the clunkers program, Standard & Poor's says it sees another two years of hard times for the nation's auto industry.
“For U.S. automakers and suppliers, a jump-start out of the global recession will require more than a quick power surge,” S&P said in a research note.
And then there are car owners like Nick Tomlinson, a pharmacist from Timmonsville, who isn't ready to part with his 2003 Chevy pickup or his 1997 Chevrolet Lumina.
He also owns a 1967 Pontiac GTO, which averages 15 miles to the gallon. The two-door classic, which he drives selectively, will remain part of his automotive household, Tomlinson said.
He said the pickup gets “very bad” gas mileage, but he only uses it for hauling or towing.
That means Tomlinson uses the Lumina, which averages 25 to 30 miles per gallon, for his daily driving.
“As long as it keeps running, I'll keep driving it,” he said.
USA Today contributed to this report.
The federal government approved its cash-for-clunkers sequel last week, and supporters hope the $2 billion new installment will continue the surge in auto sales and boost demand for fuel-efficient vehicles.
The incentive program, begun last month, has been a boon to Upstate car dealers and consumers, generating much-needed sales for dealers and significant savings for car buyers.
But as they prepared for the extension, there was concern about the government's ability to handle the process of reimbursing dealers for the new-vehicle purchases and what happens to the industry once the program ends.
Ed Rich, general manager of Dick Brooks Honda in Greer, said his business sold between 45 and 50 vehicles in the first phase of the program, but has yet to receive any government allowances.
The program appears to be such a success that electronic paperwork has bogged down computer systems, slowed the government's payment process and created stockpiles of old vehicles that won't be scrapped until dealers receive their allowances, Rich said.
“That's been the real stressing part — is just having someone sitting there trying to dot every ‘i' and cross every ‘t' and get those in,” he said. “We've got them in, but there's no approvals, no money has been transferred to our account and we've had nothing to tell us that they've been turned down.”
“I think that the dealer network in the country would feel great if they (federal officials) would just get enough people there to look at those documents and have the expertise to not spend a day looking at them, but look at them and say, ‘It's OK, it's OK, it's OK. Pay them,'” Rich said.
Officials with the National Highway Traffic Safety Administration, which is governing the clunkers program, couldn't be reached for comment.
Officially known as the Car Allowance Rebate System, it received an additional $2 billion Friday, when President Obama signed into law legislation extending the program.
Obama welcomed the extension, saying it would aid economic recovery and help the troubled auto industry.
Supporters also have hailed the program's effects on reducing carbon emissions.
Some skeptics, however, say the additional funds won't have the same impact as the first $1 billion, because many people who qualified for the program already have bought new cars and the supply of eligible vehicles is waning.
The program gives consumers up to $4,500 in federal subsidies for trading in cars that get less than 18 miles per gallon and buying new cars with better fuel economy.
Dealers are later reimbursed by the NHTSA.
The Automotive Aftermarket Industry Association also weighed in last week, saying routine vehicle maintenance for a year costs a consumer less than a monthly new car payment and would be more successful in reducing gasoline use and pollution than the clunkers program.
Vehicle maintenance would save consumers $30 billion in gasoline a year versus the government spending $3 billion in taxpayer dollars to buy new cars, the association said.
The trade group represents more than 100,000 repair shops, parts stores and distribution outlets.
As part of the clunkers program, federal officials provide a credit voucher to consumers trading in their older cars, either domestic or foreign models, when they buy or lease eligible new vehicles.
“People are doing exactly what the program said it was going to do,” said David Thomas, senior editor for Cars.com, on an online site for car shoppers that is owned by Gannett Co. and four other media companies. “They are actually turning in these large SUVs and these trucks” and shifting toward more fuel efficient mid-sized sedans and compact cars.
While there are good deals on some models — with significant cash back from dealers on top of the cash for clunkers incentive — sales of cars such as the Toyota Prius are spiking without rebates and price discounts, he said.
With lenders imposing much tighter credit conditions on consumers in the last 18 months, “Hopefully these people are not getting in over their heads, they're not buying more than they can afford,” Thomas said.
Rich, the general manager in Greer, said new-car buyers are choosing Honda Civics and Accords, while auto industry officials say other popular models include the Chevy Cobalt, Dodge Caliber, Ford Focus, Hyundai Elantra, and Toyota Corolla.
Despite the sales jolt provided by the clunkers program, Standard & Poor's says it sees another two years of hard times for the nation's auto industry.
“For U.S. automakers and suppliers, a jump-start out of the global recession will require more than a quick power surge,” S&P said in a research note.
And then there are car owners like Nick Tomlinson, a pharmacist from Timmonsville, who isn't ready to part with his 2003 Chevy pickup or his 1997 Chevrolet Lumina.
He also owns a 1967 Pontiac GTO, which averages 15 miles to the gallon. The two-door classic, which he drives selectively, will remain part of his automotive household, Tomlinson said.
He said the pickup gets “very bad” gas mileage, but he only uses it for hauling or towing.
That means Tomlinson uses the Lumina, which averages 25 to 30 miles per gallon, for his daily driving.
“As long as it keeps running, I'll keep driving it,” he said.
USA Today contributed to this report.