OPINION: Cash-For-Clunkers jump starts sales

The Cash-for-Clunkers program has jump-started new car sales in the Pee Dee, but it has adversely impacted used-car dealers who have been benefitting from a struggling economy.

New car sales have been at crisis levels for years, with the recession forcing buyers to consider lower-priced alternatives. People were swapping their clunkers for another used car.

Now, thanks to the Car Allowance Rebate System, or Cash for Clunkers, buyers can tap into $3,500 or $4,500 credit for trading gas-guzzling cars for fuel-efficient new ones. Essentially, dealers will be reimbursed as much as $4,500 for any car they accept and scrap.

Early Friday, the program was on life support. The first $1 billion allocated for the program was exhausted in less than a week. But the House, seeing an opportunity to stimulate sales, authorized another $2 billion. Dealerships were planning to make Cash-for-Clunker deals through the weekend, regardless of the confusion.

“If you were planning on going to buy a car this weekend using this program, the program continues to run,” White House spokesman Robert Gibbs said. “If you meet the requirements of the program, the certificates will be honored.”

The House on Friday voted to transfer funds from other parts of the federal stimulus package to the auto-rebate program.

The program’s objective was to nudge people into buying cars. It has succeeded in the Pee Dee and nationwide. Car dealers here say they’ve had an increase in traffic on their lots.

The recession has built a pent-up demand for new cars. Families who fear losing their jobs, or who have cut their budgets because of the recession, can make the payments more affordably with a $3,500 to $4,500 stipend.

Here’s another positive wrinkle for buyers: some dealers and manufacturers are adding their own rebates to the program. If you have a clunker, now’s the time to bargain from a position of strength. Even customers with shaky credit reports are getting approved to take advantage of the gravy train.

“There’s been quite a bit of interest it. You’re getting $3,500 to $4,500 for a car that’s in reality worth $500 to $1,000. It makes for a good down payment,” said Howard Efird, president of Efird Chrysler, Jeep, Dodge and Florence Hyundai.

Dealers are following the rules to the letter in accepting trade-ins. Clunkers cannot be traded for used cars and have to meet requirements to qualify. Shoppers have to prove they have owned, registered and insured the car for the last year. Mileage on the odometer does not matter, but the vehicle cannot be more than 25 years old.

Equally important: the vehicle has to be rated at 18 miles per gallon or less in combined city and highway driving in Environmental Protection Agency reports.

By taking in clunkers, disabling the engines and sending them to scrap yards, dealers will help the economy and environment. Gas-guzzling cars generally are the worst polluters.

The sales fever will provide a jolt to the economy. The federal stimulus money was meant to generate jobs and sales, so this program is working.

Ford Motor Co. hinted Friday, for example, that its sales rate for July might be its best in four years.

“The pace of sales has picked up dramatically,” Ken Czubay, who heads Ford’s U.S. marketing and sales operations, told Reuters.

Ford and other major automakers will report U.S. sales for July on Monday.

If you’re going car shopping today or this week, we recommend a review of the guidelines for the program. Go to the government’s Web site at www.cars.gov site.

The old clunker might never be so valuable again.

— Unsigned editorials represent the views of this newspaper. Editorial Board members are Mark Laskowski (regional publisher), James Bennett (regional editor), Sam Bundy (sports editor), Kimberly Ginfrida (news editor), David Johnson (regional circulation director), Charles Tomlinson (Lake City News & Post editor) and Jackie Torok (metro editor).