Cash for Clunkers is now coming to an end according to the National Automobile Dealers Association (NADA). NADA has asked the government to suspend the cash-for-clunkers program because a survey by the group found that the US$3bn fund has been exhausted.
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It is also being reported that the US government will announce a plan soon for winding down its popular but problem-plagued “cash for clunkers” program.
Dealers worry that the US$3bn program will run out of money before they are reimbursed for discounts given to car buyers on qualifying transactions.
NADA says it is difficult to accurately project the ‘burn rate’ of available funds” for the promotion, which provides discounts of $3,500 or $4,500 to consumers who trade in an older car for a more fuel-efficient new car.
A New York dealership group has said that hundreds of its members had stopped doing clunker transactions because of delays in getting reimbursed by the federal government.
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By GlobalDataWhile the Cash for Clunkers program is coming to an end manufacturers and dealers are concerned that their business will return to pre-clunker levels.
To address this concern, NADA says that some retailers are participating in a privately funded stimulus program to help consumers who were left behind by the government’s plan.
It says a new dealer funded stimulus program gives consumers up to US$4,500 of additional trade-in value towards the purchase of a new or used vehicle. (see details at www.AutoStimulusPlan.com).
NADA says the new stimulus plan is more inclusive because all trade-ins older than 2007 are eligible regardless of their current MPG and consumers can purchase or lease any new or used vehicle with an improved fuel economy of 2MPG. This is a contrast to the government program which excluded trade-ins with more than 18MPG, used cars and short term leasing and some vehicles needed to get at least 4MPG improvement to qualify.
“The business that came from the Cash for Clunkers program started off very strong and it has since levelled off,” said Vince Sheehy from Sheehy Automotive Group in Washington DC, Virginia, Maryland and Baltimore.
“But we did not expect it to end so fast.”
While clunker business began to slow down, dealers participating in the New Stimulus Plan have seen their sales continue to rise because they are helping the larger group of consumers that were left behind by the government program, NADA says.
“We needed to do something to help out all the customers who were upset that they could not participate,” said Rick Case, owner of Rick Case Automotive Group in Florida, Georgia and Ohio.
“Consumers love it because the new stimulus saves them a lot of money on their purchase and reduces their gas and repair bills.”
