It’s earned the title of the only government-run program the majority of taxpayers actually want to participate in, and in Saratoga County and elsewhere, Cash for Clunkers has been a resounding success, with some headaches reported.
Officially dubbed CARS (Car Allowance Rebate System), motorists can have up to $4,500 knocked off the price of a new car, courtesy the government, for trading in their gas-guzzler at a participating dealer. The program burned through $1 billion in days, though that amount was supposed to last for months. On Thursday, Aug. 6, the Senate gave the final approval for an addition $2 billion for the program.
The intent is twofold. Lawmakers hope to give contracting automakers a much-needed shot in the arm, and by taking gas-guzzlers off the road the environment will theoretically reap benefits (during the first week of the program, the average participant bought a car with a 10 mpg improvement over his or her old one). The clunkers have a mixture poured into their engines that causes them to seize up, decommissioning the vehicles.
Those pining for a rebate should check their situation first. To be eligible, the old vehicle must get an average of 18 mpg or less, and the new vehicle must get at least 4 mpg more than the old one. To check your vehicle’s stats, visit www.cars.gov.
In the mind of Kajal Lahiri, professor of economics at the University at Albany, the program has thus far been a success in that it benefits the poor`who tend to hang onto autos longer`and gets the industry moving by shifting news cars off dealership lots.
`If you pull them [cars] out, demand is created, demand for transportation,` he said. `A vacuum is created naturally, and that can be filled in by new production, so that helps the auto industry.`
Dealerships stand to benefit as well by getting a hand in moving a product that has been notoriously difficult to sell in recent months.
But while the program has undoubtedly increased showroom traffic, many dealers have complaints about its execution.
`Whoever is administering the program, it’s an absolute disaster,` said Tim Higgins, owner of Saratoga Honda, where 23 clunkers have been taken in.
Dealers have to be approved for the program before receiving access to the Web site. Even then, said Higgins, his staff sat on hold for three days when the login didn’t work. He eventually found a solution without ever talking to a CARS representative.
Dealers get to keep $50 for administrative expenses when they send to clunkers to an authorized salvage yard to be crushed, as required by the program.
`Dealers are doing crazy things to have to participate in this program. Fifty dollars doesn’t come close to compensating for the aggravation,` said Higgins.
And consumers with clunkers can also look forward to extra paperwork before their rebate can be applied, which turns into more administrative tasks for dealers once the cars leave the lot.
`How can I put this tactfully?` said Nissan Saratoga Sales Manager Joe DiCarmine. `It requires a lot of attention to detail.`
Still, for car buyers, the paperwork might seem like a small obstacle in light of the savings. On top of factory incentives, consumers could stand to knock a full third or more off the price of a new car, noted DiCarmine, who said his dealership has taken in about 30 clunkers.
`Obviously, the rebates have generated a lot of activity,` he said. `It’s an unprecedented opportunity to get assistance from the government to buy automobiles.`
None of the dealerships The Spotlight spoke with said they had received compensation from the government yet.
While the program went bankrupt in under a week, during those few days, consumers undeniably leaned towards foreign makes. More than half the cars bought under the program come from foreign car manufacturers, and of the top five models, four are from Toyota and Honda (General Motors has captured the largest share of all automakers, however).
The fact foreign manufacturers have more fuel-efficient models in their catalogue than American automakers didn’t hurt. But foreign sales don’t mean a loss for the American economy either, said Lahiri.
`A lot of the co-called Japanese cars are made in America these days anyways,` he said. `There will always been some leakage into international economies, no matter what you try to do. But what goes out also comes back.`
On the lots of some American brands, consumer preference may give way to simple logistics. A tough year for General Motors, Ford and Chrysler has meant layoffs, factory closures and decreased production, meaning fewer cars rolled off assembly lines.
The first week of the program brought 15 clunkers into Clifton Park Dodge World, said General Manager Rick Shmaruk, but supplies of new cars are dwindling.
`Now that we don’t have the inventory it doesn’t have much of an effect,` he said. `You’ll find that most of the domestic dealers don’t have the inventory that qualifies under the program.`
The $2 billion infusion of CARS money is expected to last through Labor Day. Despite passing safely in the Senate and House, vocal opponents questioned the wisdom in adding to the national debt in this manner.
Lahiri noted that the $3 billion going towards CARS is just one facet of a major infusion of government money that will take many forms with the ultimate goal of creating a `green economy.`
`The question is, as we do environmentally cleaner things, will it also boost our economy and employment? That’s not an issue that can be immediately settled, it has to be seen,` he said.“