Local News

Cash for clunkers clears out some dealerships

Posted August 12, 2009 5:34 p.m. EDT
Updated August 13, 2009 8:24 a.m. EDT

— The cash for clunkers program has left some dealerships running out of vehicles.

Dmitri Kazanski, general manager of Crossroads Ford in Wake Forest, said since the program started sales have shot up 20 percent.

“It’s a good problem to have on one side because we’ve kind of revived the business,” Kazanski said.

Kazanski said the company didn’t expect so many cars to sell so quickly. It will take time before inventory catches up with the increase in demand.

“The dealer can still possibly get the car that the consumer is looking for. It just may take more time for the dealer to trade for that vehicle,” said Robert Glaser, president of the North Carolina Automobile Dealers Association.

Such a scenario amounts to a complete shift from earlier in the year, when hard-hit dealers saw cars pile up as consumers largely shunned big-ticket purchases.

It also reflects the rampant popularity of the incentive program, which gives car owners vouchers of up to $4,500 to trade in older, gas-guzzling vehicles for new, cleaner varieties.

On Friday, President Barack Obama approved another $2 billion to extend the program until Labor Day, putting consumers back in the car-buying mood. The program's first $1 billion ran out in about a week.

However, industry officials say shoppers now searching for deals may need to be more flexible, given the dwindling number of cars on many lots. Customers hoping for a blue vehicle, for instance, may need to settle for a white one instead, said John McEleney, the chairman of the National Automobile Dealers Association.

"People are having to maybe make a second or third choice," he said.

Kazanski said Crossroads Ford has been working with customers to get the vehicles they want from other dealerships.

The association's chief economist, Paul Taylor, said in a statement Friday that "the overall inventory of passenger cars and light trucks can support another month of robust new vehicle sales" as automakers ramp up production.

Still, even as car lots thin, some wonder whether the new infusion of government cash into the clunkers program is actually weakening consumers' resolve to go out and make a deal.

During the first phase of the program, which began last month, consumers flocked into dealerships, worried that they'd miss out if the money ran out. Now, shoppers may not feel as pressured.

Glaser said he is concerned that the government is not quickly paying back dealers when they deal for a clunker.

Preliminary results of a survey among association dealers show they've been reimbursed on less than 1 percent of transactions.

“Dealers are on the hook for this money,” Glaser said.

A National Highway Traffic Safety Administration spokeswoman Karen Aldana said the agency has begun reimbursing for valid transactions. She said many times dealers don't submit all the necessary information, which can delay the process

Like many other customers, Julianne Rowan took advantage of the program this week. “They’re going fast,” Rowan said.