Cash for Clunkers is a Tremendous Success but Not Without Growing Pains

"Cash for Clunkers" is, without a doubt, the best program the government has come up with for car dealers and buyers in a very long time. The timing and positioning couldn't have been better.

The timing was just right for the lifeline that Congress threw to dealers in the form of $1 billion in "Cash for Clunkers." The positioning was just right, too. After all, if a car gets less than 18 mpg, even with lots of highway driving where you tend to get maximum fuel-efficiency, and you can get $4,500 to buy a new vehicle that gets at least 4 mpg more, then you have a match made in heaven.

Finally, there's the trade. Well, actually there isn't supposed to be a trade-in because any vehicle sold under this program has to be scrapped. That's why, if you watch Toyota's current series of ads you see about a 1997 Land Cruiser that's sitting in between two bright yellow car crushers. The close and reopen and then Toyota show the number of cars it has available that are covered by the program.

This program has been a success thanks to the efforts of manufacturing/marketing teams that have come up with some interesting ideas. For instance, Chrysler will automatically match the federal $4,500 "Clunker" cash with $4,500 of its own as an incentive. This means that you can knock $9,000 off the top of a car. In MA dealers are trying innovative ways to bring people in. For instance, Westborough Mitsubishi just sent out a very official looking document (more than one person has probably thought it was a real check and went to cash it, only to find out that it is part of a marketing plan).

It's actually a pretty neat idea because it does guarantee you the $4,500 "Clunkers" cash and it also offers you another $1,870 that can be used with the "Clunker cash" to move a vehicle. There are also a couple of cash prizes being offered as well as a 42-inch plasma television. It's a very urgent-looking letter and makes for some fascinating reading especially the part where it says it will give you the $1,870 reimbursement and it ill add into the deal. Hyundai took a bold step by looking over their stock, apparently, and then giving dealers the incentive money right from its own coffers

To date, sales have been far higher than previously thought. Said Bob O'Koniewski, executive e vice president of the MA State Auto Dealers Assn. there have only been 40,000 applications turned in for cars for reimbursement. "Dealers are having a hard time getting registered," he noted in a recent interview. Once they are registered for the program, they are finding getting their refunds "extremely frustrating."

Mark Chapdelaine, owner Chapdelaine Pontiac, Buick, GMC, in Lunenburg, MA, indicated in a recent newspaper interview that his July was one for the books. Not only was he facing the start of the ["Clunkers"] program, he was also facing a 1.25 percent increase in the state sales tax Aug. 1. It was little wonder, then, that his July was one for the record books.

During July, he sold 13 "Clunkers" worth $64,000 and now he is awaiting reimbursement. He dropped out of the "Clunkers" program on July 31. He will rejoin it when he knows the "money has been officially set aside."

(This was the period when Congress was debating adding $2 billion to the program, which it has done and the president has signed the bill.)

Another MA dealer, Brian Smith of Brian Smith Hyundai in Leominster told the Lunenburg Sentinel that he has sold 30 to 40 cars under the "Clunkers" program, but he is holding them until he is paid by the feds. "It's been a little frustrating for us and the customers because we can't wait to hand out these cars until we're sure we're going to be refunded and the customer doesn't want to wait to get their new vehicle...on the lots right now just waiting to be picked up, once we get the money."

Other Ford dealers in this area have sold cars with the contingency that the customer can pick them up, but they must be returned, if the federal money doesn't come through.