The government’s Cash-For-Clunkers program has been officially launched; to some is a success but to other it may spell not fair well for used car dealers. According to AutomotieNews.com this program has more customers fulling up new car show rooms across the country.
The Cash For Clunkers Program has many used dealers on the ropes.
Many customers across the country are finding out that their vehicles do not qualify for the program. They have been walking into dealerships expecting to get rid of their clunker for a green vehicle and a voucher for $4,500. Some even end up buying a used vehicle anyway; this may hurt many used dealers due to the volume of customers flocking toward the new dealerships looking for those vouchers.
This hurts many within an industry that has been badly beaten by the economy; now this is like throwing salt on a wound. As if used car sales were not struggling enough, this just affirms that maybe the government may have rushed into this cash for clunkers thing? But this program is still in its first stages; lets see what happens at the end of the quarter or even by the end of the year.
The worst thing is that there are a few unsatisfied customers out there who have to settle; they need the vehicles but they had to settle due to a government program. As stated below one customer didn’t get exactly what he wanted.
Wallace says a customer who wanted to trade his 1989 Toyota pickup for a new vehicle didn’t qualify. It was “a junker in every sense of the word,” he says, but the truck’s four-cylinder engine was too fuel-efficient to qualify under the government rules.
Wallace gave the man $1,800 for the truck and sold him a used 2008 Nissan Versa small car.
“He was a little disappointed, but he needed a car,” Wallace says
This program works well for most of the GM dealerships that have been in ot water. But its the average used car dealer that will suffer here; this program has potential buyers flocking to new car show rooms and ignoring the used car dealers on the way there.
Why scrap a car that can be resold? That doesn’t seem like something that should be done during rough times. But what do we know?
Here is the rest of the article…
Says Greg Cole, who owns Chevrolet dealerships in Pocatello, Idaho, and Athens, Ga.:, "It’s a positive program, and it’s just when General Motors dealers needed it."
But it also has redirected customers away from Cole’s used-car lots to new-car showrooms.
Adam Simms, owner of Toyota Sunnyvale in Sunnyvale, Calif., says his new-car sales are strong thanks to the federal government program. He expects to sell about 190 used vehicles in July, which would be his best used-vehicle sales month ever.
But Simms is concerned that taking so many used vehicles out of the market to be destroyed will hurt his used-car business over the next few months. Of the 130 vehicles he has taken in under the program, about 110 would have been resold as used at his store under typical circumstances.
Says Simms: "You’ll see the impact in August, September and October of those cars being destroyed."
Half ‘true junk’
Wallace says half the vehicles he has taken on trade under the guzzlers program are “true junk,” but the others “are vehicles somebody would have retailed.”
So in some instances, Wallace is giving customers $4,500 for their trade-ins so he can sell the vehicles on his used-car lot.
“People are always calling, saying they want an $8,000 or $9,000 car to go fishing in or for their high school student,” Wallace says. “You can never have enough of those cars.”
Source: http://www.autonews.com/apps/pbcs.dll/article?AID=/20090729/ANA05/907299975/1132&AssignSessionID=373326151678011
