‘Cash for Clunkers’: Boost or bane?
by Erica Mendez
Monday, June 29, 2009
Dale Bryan, owner of Bryan Motors, places a temporary tag in a car he sold Saturday afternoon. Mr. Bryan says the Car Allowance Rebate System, which goes into effect July 1, will make it harder for him to buy cars to sell on his lot in north St. Joseph.

Photo by Jessica Stewart / St. Joseph News-Press / Purchase this photo

Dale Bryan, owner of Bryan Motors, places a temporary tag in a car he sold Saturday afternoon. Mr. Bryan says the Car Allowance Rebate System, which goes into effect July 1, will make it harder for him to buy cars to sell on his lot in north St. Joseph.

Out with the old and in with the new. Only if the new has better mileage, that is.

The “Cash for Clunkers” program, now called the Car Allowance Rebate System, was signed into law on Thursday. Essentially, by trading in a vehicle for a new one that is more fuel efficient, the program will pay consumers up to $4,500 in credit, depending on how much better mileage the new vehicle gets.

For example, a new car that is four miles per gallon better than the old is eligible for a $3,500 voucher. If the new car gets 10 mpg better, it may be worth the maximum $4,500 voucher.

For SUVS, pickups or minivans, a new car that gets two mpg better gets a $3,000 voucher, and $4,500 if five mpg better.

“I think it’s a great program, and it’ll help the environment,” said Mike Westcott, general manager of Cecil Myers Mitsubishi. “I think it could give us a few more deals that we weren’t looking for.”

Regulations to determine what vehicles qualify for the credit can be found at www.cars.gov, a Web site put together by the National Highway Traffic Safety Administration, which is charged with overseeing the program.

In brief, your vehicle may qualify for credit if it is a 1984 model or newer; if it gets 18 mpg or less; and if it is registered, drivable and insured by the same owner for the past year.

Tony Franklin, managing partner of Anderson Ford Lincoln Mercury, says he appreciates the positive step it’s taking to get older cars off the roads and to help the environment. He says it will be successful because the regulations are not unattainable.

“We’ve had requests, a fact-finding mission for it by customers. They’re already aware of it,” Mr. Franklin said. “We’ve had some customers who aren’t going to do anything until they hear more about it. They’re excited.”

Hoping to jump-start car sales, automakers, unions and dealers lobbied heavily for the plan, patterned after successful programs in Germany, Britain and other European countries. Roger Auxier, owner of Car City in St. Joseph, said he believes the program also will improve the auto dealer’s business.

“From our point of view, it certainly can provide a benefit, both for us and customers out there. There’s no question about that,” he said.

But Mr. Auxier is a realist.

“It won’t be all positive for everyone. It’s a trade-off,” he said.

These three dealerships, which sell both new and used cars, all agreed that the legislation’s stipulation about traded-in cars being destroyed will not have an effect on their used car sales. They say the age and quality of those cars would not be suitable for resale anyway. But support for the legislation ends when it comes to strictly used car dealers.

“It’s going to make it harder to buy the kinds of cars I sell,” said Dale Bryan of Bryan Motors. “They have parts that are valuable to the used car market. But nothing can be salvaged.”

Mr. Bryan explained that many of the people he has talked to are not in favor of the program, and that it won’t benefit low-income families who own the types of vehicles qualified for trade-in.

“Most of the people that have that type of car aren’t going to be able to make the payments on their new car,” he said.

Used car dealers are not the only ones opposed to the program. Business leaders have said that the program is too limited, securing the sales of only about 250,000 cars, and will disproportionately benefit foreign cars.

Some environmentalists believe the program will divert attention and funding from public transportation, prematurely take functioning cars off the road, and with the right trade-in, allow tax deductions for larger passenger vehicles, including the Hummer or Ford Expedition.

Regardless, the CARS program will begin Wednesday and continue until Nov. 1, or when the $1 billion allocated to pay for the program runs out.