It might seem appropriate that a federal “cash for clunkers” program started with a crash. A dealer-registration Web site shut down just minutes after the launch Friday because of overwhelming demand from across the country in anticipation of a program that offers consumers up to a $4,500 credit to trade-in gas-guzzling vehicles.
It might seem appropriate that a federal “cash for clunkers” program started with a crash on Friday.
A dealer-registration Web site shut down just minutes after the launch because of overwhelming demand from across the country in anticipation of a program that offers consumers up to a $4,500 credit to trade-in gas-guzzling vehicles.
“I started trying at 6 a.m.,” said Mark Greenwood, controller for Friendly Chevrolet Inc. in Springfield. “I got to the front page twice, but it would kick me out on the second page. I’m sure every dealer in the country is trying to get on it.
“Customers are excited about it,” he added. “The confusion has come on the back side, trying to get registered with the federal government and determine what documentation is needed.”
A voicemail on a dealer hotline Friday at the U.S. Department of Transportation advised that the agency was working on the problem but, due to the demand, it would be better for dealers to check back.
The much-anticipated rules are part of a $1 billion federal push to encourage consumer purchases of more fuel-efficient cars and trucks, while also boosting the auto industry.
Dealers said they expect to begin submitting credit applications for consumer trade-ins Monday, though the legal counsel for the Illinois Automobile Dealers Association said Friday he was still wading through 138 pages of rules.
“I’ve heard from a number of dealers who have been having trouble, the system is so overwhelmed,” said Larry Doll.
The association also is waiting for a ruling from the Illinois Department of Revenue on whether dealers are accountable for sales taxes on the federal credits. Under the rules, consumers get the credit at the time of purchase. The federal government then pays the credit to the local dealership.
Despite the computer glitch, area dealers said they expect strong consumer interest.
“Up to now, we’ve just been getting bits and pieces. We have several buyers waiting in the wings with vehicles,” said Kevin Kallister, president of S&K Pontiac-GMC Inc. in Springfield.
“From a consumer standpoint it’s great, and from a social standpoint, you’re getting some of the worst vehicles off the road,” Kallister added.
While the incentives are expected to help the troubled auto industry, the program has not been universally welcomed.
The president and CEO of the Automotive Aftermarket Industry Association, which represents the nation’s auto parts dealers and repair shops, released a statement this week predicting a “consumer backlash.”
“t wouldn’t surprise me … once car owners realize that ‘cash for clunkers’ is nothing more than a clever slogan for a program to spend $1 billion of our tax dollars to fund a government-subsidized vehicle trade-in to help new car dealers sell cars,” said Kathleen Schmatz.
Schmatz said the incentives also will lead to premature destruction of useful vehicles and would make it harder for consumers to find affordable used cars.
Tim Landis can be reached at (217) 788-1536 or email@example.com.
How it works
There are 138 pages in guidelines for the federal Consumer Allowance Rebate System, better known as Cash for Clunkers. Consumers can get additional information at www.cars.gov or by calling toll free (866) 227-7891. Here some highlights:
* Vehicles must be purchased or leased from a dealer between July 1 and Nov. 1, 2009.
* Trade-ins must be less than 25 years old on the purchase date. Generally, vehicles must get 18 miles per gallon or less (rules vary for large pick-up trucks and cargo vans). They also must have been registered and insured for at least a year prior to trade-in.
* New vehicles must be more fuel-efficient. The credit ranges from $3,500 to $4,500, depending on the MPG improvement. Dealers apply the credit at the time of purchase.
* The dealer also will provide a scrap value estimate for the trade-in that is in addition to the purchase credit.
Source: U.S. Department of Transportation.
Salvage dealers also await program
New-car dealers were not the only ones waiting for rules on a federal “Cash for Clunkers” program.
Auto-salvage companies are waiting to see the ripple effects of a provision that requires trade-ins through the program to be recycled rather than resold. Federal guidelines released on Friday provided a list of hundreds salvage yards in Illinois alone that are licensed to recycle vehicles, including several in the Springfield area.
“It’s really going to depend on the cars and what they’re worth,” said Gary Swaggerty, co-owner with Jerry Fox of Jerry & Gary’s Auto Salvage. “You just can’t say right now,”
Swaggerty said he is still waiting for clarification of the recycling rules, adding that cars for salvage typically bring $130 to $150.
Doug Nevill of Nevill’s Auto Salvage said he doubts that “cash for clunkers” will have much effect on business at all.
“I’d say about 80 percent of the people I deal with just need the $150, and they need it today,” he said.
-- Tim Landis
Con artists move fast
It didn’t take scam artists long. Illinois Attorney General Lisa Madigan warned Friday of fake Web sites that seek to steal consumer identities by asking for Social Security and other personal information in order to “pre-register” for car-buying credits. Consumers in the Springfield area who believe they have been targeted can obtain complaint forms by calling (800) 243-0618 or online, www. Illinoisattorneygeneral.gov/consumers.