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Show me the money



Published: Tue, August 25, 2009 @ 12:00 a.m.
  Cash For Clunkers

Cash for Clunkers program has been great for Boardman Subaru owner Rob Fellman.

Cash for Clunkers program has been great for Boardman Subaru owner Rob Fellman.

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ALL SMILES: Rob Fellman, owner of Boardman Subaru, South Avenue, leans on one of the many “clunkers” he took in on trade during the federal government’s Cash-for-Clunkers program. Under the $3 billion federal program, which ended Monday, new vehicle buyers received from $3,500 to $4,500 cash back for their old gas-guzzling vehicles.

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OLDIES BUT NOT SUCH GOODIES: Rob Fellman, owner of Boardman Subaru and vice president of the Auto Dealers Association of Eastern Ohio, said the Cash-for-Clunkers program was a big success. He is standing in front of some of the clunkers he took in on trade from customers who cashed in on the $3,500 to $4,500 the government was offering to new car buyers. A lot of the trade-ins were almost worthless, he said.

Dealers want their government money, said the head of the Auto Dealers Association of Eastern Ohio.

By WILLIAM K. ALCORN

VINDICATOR STAFF WRITER

YOUNGSTOWN — Now that the Cash for Clunkers program is over, the next question is when will area dealers get their money from the federal government.

The program, which area dealers say was successful in spurring sales and getting a lot of vehicles off the road that needed to be retired, ended at 8 p.m. Monday.

The program will not be a complete success, however, until all the dealers have been paid by the government, said Steve Chos, executive vice president of the Auto Dealers Association of Eastern Ohio.

Cash for Clunkers, officially known as the CAR Allowance Rebate System (CARS), was a $3 billion government program that helped consumers buy or lease a more environmentally friendly vehicle from a participating dealer when they trade in a less fuel-

efficient car or truck.

Consumers were able to take advantage of the program and receive a $3,500 or $4,500 discount from the car dealer when they traded in their old vehicle and purchased or leased a new one.

The National Highway Traffic Safety Administration, a part of the Department of Transportation, administered the program.

“None of the dealers I’ve spoken with have received all of their money. They were supposed to be paid within 10 days of inputting a deal, and some have still not been paid for deals going back to late July and early August,” Chos said.

That is creating a serious cash-flow problem for some dealerships, who have to pay bills and make payroll and pay back the lenders who put up the money for their stock of new vehicles, Chos said.

Dealerships have had varying levels of success in getting government reimbursements.

Diane Sauer Chevrolet in Warren has “so far had zero paid back from the government,” Bill Rutledge, sales manager, said Monday.

Plus, he said, the 27 clunker deals made between July 27 and Aug. 1 are not eligible for the $4,000 per vehicle that GM is fronting its dealers until their government money arrives.

Program legislation was passed July 1; however, the rules were not revealed until July 27. Dealers could begin signing deals July 24 and inputting them for approval after July 27, Chos said.

The rules specified dealers would be paid within 10 days, but as of last Thursday, the Department of Transportation had $1.9 billion in deals submitted. Of that amount, only about $150 million had been paid, he said.

Area dealers are sitting with significant outstanding receivables up to $600,000 owed them by the government, Chos said.

Secretary of Transportation Ray LaHood and President Barack Obama stated last week that the dealers would be paid for the transactions.

“However, the dealers are sitting here waiting and its not coming, or coming very slowly,” Chos said.

“We’re working with auto dealers to make sure the Department of Transportation lives up to its commitments, and do it quickly. It needs to pay auto dealers sooner rather than later. They shouldn’t have to wait to receive that money,” said U.S. Sen. Sherrod Brown, a Democrat from Avon.

Brown couldn’t give a time frame as to when the dealers will get the federal payments, but “it should come soon.”

As for the program, “it’s been an unqualified success. It surprised all of us. It was a huge success,” Brown said.

Despite Monday’s deadline for deals, Chos said many local dealers stopped offering the program last week when it was announced that the program would end.

One dealer who didn’t stop making deals, R.D. Banks Chevrolet in Champion, may have profited by other dealers shutting down clunker deals early.

The business kept doing deals and sold five vehicles under the program Saturday, some of whom were customers from out of the immediate area who owner Russell Banks thought would normally have gone to dealers who were no longer doing deals.

“It [clunkers program] did what it was supposed to do,” said Banks, who also is president of the Auto Dealers Association of Eastern Ohio. “It took a lot of gas hogs off the road, and drove more traffic into our showroom that any single program we’ve ever had.”

Another dealer who thinks the clunkers program was a big success is Rob Fellman, owner of Boardman Suburu.

It created a lot of activity around the dealership and led to a 40 percent to 50 percent increase in sales in July, he said.

“Right now, I have more clunkers than new Suburus on the lot,” he said.

The negative of the program was that the government was unclear on the procedures and the slowness in approving payments.

Fellman said, however, “We were on top of it from the get-go. We’ve been paid on 10 deals, two early in the program, and eight more that hit my bank account over the weekend.”

The value of the clunker trade-ins varied from dealer to dealer.

“A lot of vehicles we took in were almost worthless. Most were somebody’s extra vehicle,” Fellman said.

But, Mike Hudock, general manager of Stadium Chevrolet Buick Pontiac GM Cadillac in Salem, said a “lot of very nice cars went away ... a lot of trade-ins we would loved to have had.”

Likewise, Rutledge of Diane Sauer Chevrolet said the program took a lot of trade-ins that the dealership might have had off the market.

Hudock said Cash for Clunkers definitely brought traffic into the store that turned into sales. The dealership had made 82 to 83 clunker deals as of Monday morning.

And people who couldn’t find what they wanted in terms of payments on a new car were open to looking at used cars, he said.

alcorn@vindy.com


Comments

1Search4Answers(710 comments)posted 4 years, 8 months ago

This program sure sounds like a disaster.

Suggest removal:

2stoutmaster(28 comments)posted 4 years, 8 months ago

They can't run a small program efficiently what makes people think they can run health care? They ran out of money sooner than they expected, what makes people think they've got the numbers right for health care?

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3jimhenry2508(2 comments)posted 4 years, 8 months ago

For working trucks the rule is not based on the fuel efficieny. As long as it is manufactured before 2001 they all qualify
but cannot be older than 25 years old.

Jimhenry
Blogger
www.cashforclunkersfacts.info
http://www.cashforclunkersfacts.info

Suggest removal:

4cambridge(2919 comments)posted 4 years, 8 months ago

Search...."This program sure sounds like a disaster."

"The program which dealers are saying was successful in spurring sales..."

Senator Brown..."It's an unqualified success.""

R,D, Banks...."It did what it was supposed to do." "....and drove more traffic into our showroom that any single program we've ever had."

Boardman Suburu....led to a 40% to 50% increase in sales in July.

Stadium Chevrolet Salem....The dealership made 82 to 83 clunker deals as of Monday. And people who couldn't find what they wanted in terms of payments on a new car were open to looking at used cars.

Search....You read these statements and see a disaster? What would you call a success? So these dealers are going to get paid a few days late, big deal. You know what was a disaster? A trillion dollar 6 1/2 year search for "weapons of mass destruction", How many negative comments did you post about that "government program"?

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5Search4Answers(710 comments)posted 4 years, 8 months ago

Cambridge, I'm just wondering if you are familiar with the 2005 GM employee discount for everyone promotion? GM had to clear the lot because they like usual overproduced. After all the hype of that program passed, their sales numbers for the next 6 months were down significantly.

"Highly-publicized summer incentives, including so-called employee discount offers used to clear out 2005 model inventories, pulled many potential car buyers into the market earlier than they might have been otherwise.

The dreaded "pull-ahead" effect has cast a distinct autumn chill over many automotive showrooms, analysts said."

http://www.foxnews.com/story/0,2933,1... (Sorry it's fox, I've found better but this should do to back it up for now)

I can't think of a good government program to tell you the truth and I'm right there with you on the wmd thing. I would have been protesting myself If I could drive at the time. I wish I would have started on this site about a year earlier, you and I would have probably had a lot in common as far as disliking the policies of Bush.

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6Search4Answers(710 comments)posted 4 years, 8 months ago

O, my least favorite policy perhaps of all time was Bush's stimulus rebate checks. Sure it got us a new TV but it was largely a moronic idea. Granted I don't believe in keynesian economics but atleast with Obama's plan they put a little bit of thought into it and it'll keep my car in better condition with the roads.

I opposed almost everything he did, the rebate checks stimulus is the posterchild for dumb policies that did nothing but raise the debt.

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7jwhenry2508(1 comment)posted 4 years, 8 months ago

For working trucks the rule is not based on the fuel efficieny. As long as it is manufactured before 2001 they all qualify
but cannot be older than 25 years old..

Henry
Blogger
www.cashforclunkersfacts.info
http://www.cashforclunkersfacts.info

Suggest removal:

8Tugboat(759 comments)posted 4 years, 8 months ago

Looks like the Subaru dude told Boardman Zoning to go eff themselves! Nice gravel lot!!!

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9Pierside12(9 comments)posted 4 years, 8 months ago

Whether or not you like this program, I wonder if we are missing the bigger picture here.
Did ANY of our representatives know that this was in the Stimulus when they voted for it? I don't remember any mention of it as one reason to vote FOR the bill.

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10DoctorGonzo(728 comments)posted 4 years, 8 months ago

That is a great point pierside.
I would argue that because the program was grossly underfunded and there was seemingly no forecasting done on the demand that congress had no idea it was in the stimulus bill. This is status quo for the great congress of the US. The biggest bunch of pigs gathered together in one room at any given time.

The program did boost sales. That is a real plus. I think it is a joke that dealers must endure even more cash flow problems associated with the government taking their time getting the payments out to the dealers however. The upper crust of society doesn't know anything about cash flow issues though. It all goes back to the government not preparing efficiently for something they implemented, status quo again.

I would love to see a really successful small business entrepreneur get elected to a position of material power in this country just once. Then perhaps things would be done with more intelligence on an economic level.

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11jetercp(67 comments)posted 4 years, 8 months ago

again, we bail out the automotive industry. of course this guy is smiling, free money for a junk car would benefit anyone...
let's keep bailing out the automotive industry time after time while millions are unemployed...

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12steelerman09(111 comments)posted 4 years, 8 months ago

"Cash for Clunkers"....where does the money come from? US. So, why does everyone think this is so great....The working man has funded this, so the people that don't work get to go and get a free $4500 credit towards their new car!

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13blkpride(186 comments)posted 4 years, 8 months ago

QUIT VOTING THESE STUPID DEMS INTO OFFICE!!!!!!

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14cambridge(2919 comments)posted 4 years, 8 months ago

Cash for Clunkers generates 700K new car sales.

http://www.comcast.net/articles/finan...

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