by Peter Whoriskey

The biggest single beneficiary of the $3 billion “Cash for Clunkers” government program so far is  Toyota, according to federal figures released Friday.

Three of the five most popular vehicles purchased under the program are Toyota models: the Corolla (No. 1), the Camry (4) and the Prius (5).

Halfway through the program, Toyota is getting the largest share of the new purchases under the program with 19 percent, according to the figures released Friday by the National Highway Traffic Safety Administration.

Two U.S. automakers follow closely behind Toyota, however, with General Motors at 18 percent and Ford at 15 percent of the new business. And about 54 percent of top 10 models purchased under the program are manufactured in the United States, according to the figures. The Corolla, Camry and the Honda CR-V 4WD are all manufactured domestically.

“I’ve always been confused by the ‘Buy America’ thing when there are plenty of Hondas built in Atlanta,” said Neil Kopit, director of marketing at Criswell Automotive which owns Chevrolet, Nissan, Honda and Hummer dealerships in Maryland. “There is a profit leaving and going overseas. But who is it enriching before it goes there? The dealers and the salespeople and the mechanics all live and work in the community.”

Designed to revive the economy by stimulating auto sales, the Cash for Clunkers program offers the owners of older cars $3,500 or $4,500 if they turn in their vehicles and buy a new, more fuel-efficient ride.

An initial version of the legislation, introduced by Rep. Betty Sutton (D-Ohio), limited the new purchases to vehicles built in North America. That way, the spending would directly benefit U.S. workers. But critics said the restriction violated trade law.

“To avoid any kind of complications with the World Trade Organization, we made adjustments that allowed our companies to robustly compete, and they are, as the new figures show,” Sutton said Friday. “The majority of cars being purchased are being built in the United States. This is an unmitigated success.”

So far, more than 350,000 vehicles have been purchased under the program and about half of the $3 billion budget has been spent, according to the new figures.

The average fuel economy of the cars being traded in is 15.8 miles per gallon and that of the new cars replacing them is 25 mpg.

The program has led many car buyers to downsize their vehicles, with about half of the nearly 300,000 people turning in SUVs, minivans, pickups and other trucks for a car.

The new vehicles being purchased are 19 percent more efficient than new cars currently available, according to the federal figures.

“It’s quite a revelation to see consumers moving in droves from trucks to high-efficiency cars — it’s just not something the auto industry has led us to believe is possible,” said Therese Langer, transportation director at the American Council for an Energy-Efficient Economy.

Source: Washington Post

by David Kaplan

Here’s a problem Houston auto dealers haven’t had in awhile: They can’t keep enough new cars in stock.

The federal Cash for Clunkers program is so popular that many of them haven’t been able to meet the demand.

Dale Early, owner of Deerbrook Forest Chrysler Jeep, said his inventory is the lowest it has been since he opened in 1987.

“We are very low on inventory. I think everybody in the city is,” said Don Stokey, a salesman at Tommie Vaughn Ford.

Cash for Clunkers allows consumers to bring in their gas-guzzlers and receive up to $4,500 in vouchers with the purchase of new, more fuel-efficient vehicles.

Initially under the government program, car buyers could only purchase vehicles that were in stock, but late Thursday the Obama administration announced that consumers will be able to use Cash for Clunkers to reserve the vehicle they want.

“That’s great news,” Early said. “It should really help consumers with making choices and allow dealers to retain their customers.”

Throughout the recession, car dealers had been stuck in a terrible slump as consumers cut back on discretionary spending. Cash for Clunkers is bringing them back into showrooms.

Since the incentive program went into effect in late July, sales have been brisk, but many of the more fuel-efficient vehicles are now in short supply. Tommie Vaughn’s Stokey said that because of Cash for Clunkers, many of his 2009 Ford Escape, Focus and Fusion models are out of stock.

The 2010 models are starting to roll in, he said.

Hearing the news that the Transportation Department will now let consumers order their vehicles as opposed to having to choose what’s on the lot, Tommie Vaughn sales manager Kirby Janke said he is not sure how much more business that will bring. “It all depends on how long the money lasts,” he said.

Another infusion?

After the first $1 billion in subsidies for Cash for Clunkers ran out, Congress allocated another $2 billion.

“It wouldn’t surprise me if the Cash for Clunkers bill is renewed for a third time in the fall,” said Kim Korth, president of IRN, an automotive industry consulting firm.

Dealers across the U.S. have reported shortages, she said, and a number of manufacturers have begun ramping up production.

“No question, the Cash for Clunkers program has been more successful than any of us thought it would be,” said Walter Wainwright, president of the Houston Automobile Dealers Association.

“I’m trying to find inventory to meet the demand,” said Alan Helfman, vice president of River Oaks Chrysler Jeep. “This is something I haven’t seen in a long, long time.”

Tommie Vaughn’s Janke has seen Cash for Clunker sales slow down.

“The first week we were swarmed. It was pretty crazy around here,” he said.

Tommie Vaughn is still selling about two cars a day under the program, he said.

New business

For Early, one of the best things about the program is that “it’s gotten people back into the marketplace that normally wouldn’t have been.”

One of his customers, for example, came for a new Chrysler Sebring convertible. She didn’t qualify for the clunker rebate, “but we gave it to her anyway,” Early said.

“We didn’t have the car she wanted,” he noted. “I had to go drive to New Orleans to get it.”

Deerbrook Forest Chrysler Jeep is low on inventory for two reasons: The popularity of Cash for Clunkers and the fact that Chrysler wasn’t producing cars when it was under bankruptcy protection, Early said.

“I think the month of August will show an increase in sales over last year for Houston dealers” for two reasons, Wainwright said: The Cash for Clunkers program and the fact that sales last August were so low in comparison.

“This is my first new car, and I’m about to turn 60,” said Mike Villareal, a disabled delivery driver who took advantage of the program a few days ago. He traded in his 1992 Dodge Dakota for a 2009 Ford Focus.

“For the first time, everything is under warranty, and everything works,” Villareal said.

Source: Houston Chronicle

by Joseph B. White

Washington topped off the tank of “cash for clunkers” money just in time before it ran dry last week. But would-be car buyers could have to pay up to get some of the most popular vehicles eligible for the program unless car makers order up more production.

Consider the Honda Fit, one of the top 10 vehicles acquired by people trading in clunkers. Dealers had 50 days’ worth of those left as of July 31. But Fits are going fast thanks to cash for clunkers—or rather, Honda isn’t building Fits as fast as they are going. In July, Honda shipped about 3,800 fewer Fits than its dealers sold. The net result: Fits in stock dropped to about 17,000 from about 22,000 at the end of June, according to Autodata Corp.

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WieckThe Honda Fit is among favored cars acquired by people trading in clunkers.

The Fit is in decent supply compared with some other cars on the clunker program’s Top 10 list. The Toyota Prius was almost sold out at the end of July, with just 13 days’ worth left on Toyota lots. The No. 1 selling clunker replacement, the Toyota Corolla, was down to 34 days’ supply. The Ford Escape compact crossover wagon—the best-selling such vehicle under the clunker program—is down to just 21 days’ supply.

You don’t need detailed inventory data to get the picture. Cash for clunkers brought Christmas in July—and now August—for car dealers. This means that if you want to get the benefit of the next $2 billion in cash-for-clunkers trade-in vouchers, you may need to 1) accept that the new car may cost closer to sticker price than you like, or 2) might not be the exact car you want.

The dwindling numbers of popular models prompted some members of Congress to suggest that the Obama administration change the cash-for-clunkers program rules to allow people to scrap qualified clunkers and use the $3,500 or $4,500 government voucher for a future purchase. The Transportation Department told Dow Jones Newswires Tuesday they’re reviewing the idea. Congress could make this change, but it’s out of session until September.

If you want a compact car, check out a Mazda 3 (47 days’ supply, Consumer Reports recommended). If you have a bit more money, the Acura TSX is a sporty compact with a luxury brand and, as of July 31, 60 days’ worth of stock. The Acura dealer might just be more flexible than a Ford dealer with nothing left but stripped purple Focuses left on the lot. Another compact car alternative: the Volkswagen Jetta. Not cheap, but recommended by Consumer Reports and at 44 days’ supply, not as scarce as it could be.

One of the toughest categories, for bargain-conscious shoppers, is compact crossover sport-utility vehicles, such as the Ford Escape. Toyota’s rival RAV4 was down to just 20 days’ supply after the July sales rush. Honda had just 37 days’ worth of its popular CR-V wagons left. The new Chevrolet Equinox was down to 25 days’ supply. But Hyundai’s Tucson is in relatively plentiful supply—93 days’ worth left on hand as of July 31. Consumer Reports lists the Tucson on its recommended list.

Some popular midsize cars are still in decent supply, though dealers aren’t as desperate to move them as before. Toyota had enough Camrys on hand at the end of July to last just 37 days—not a lot for such a high-volume model. The Honda Accord and Chevy Malibu are closer to the 60-day supply level.”Everybody’s still a bit gun shy following the first half of the year,” says Joe Langley, a market analyst with CSM Worldwide, an automotive forecasting firm in Northville, Mich. “If demand’s there, they can start cutting incentives.” Mr. Langley says he expects car makers will aim to hold inventories of cars and crossovers closer to 45-50 days’ supply, instead of the old 60-65 days’ supply rule of thumb, the better to firm up pricing.

What should consumers do? First, decide whether the cash-for-clunkers program makes sense for you. You need to own and have registered for the past year a vehicle rated by the Environmental Protection Agency at 18 miles per gallon or less in city and highway driving combined. You have to be willing to scrap that car for a maximum $4,500 off a new car. That new car will come with a loan, taxes and higher insurance costs.

If that makes sense, start shopping and keep your ears open for news that auto makers have decided to increase vehicle production from the plans they set before the cash-for-clunkers whirlwind hit. Even if they do, the increases could be relatively modest. The industry faces a conflict. Auto makers like the situation we have right now—with lean inventories and a demand pop subsidized by Uncle Sam providing the leverage to charge higher prices.

Restraining output could mean leaving some money and market share on the table. But the big mass-market players also have seen sales surges like this followed by sales busts many, many times.

Source: Wall Street Journal

by Steve Huffman

The Senate on Thursday voted to approve $2 billion to “cash for clunkers,” extending the program intended to get old cars off the road.

President Obama signed the measure into law Friday.

Locally and across the nation, the program has proven popular. In some regards, too much so.

“It’s definitely picked up activity at our business a lot,” said Bruce Earnhardt, general sales manager of Cloninger Ford on Jake Alexander Boulevard. “Our trouble is getting cars. My prediction is we’re going to run out of inventory before we run out of (incentive) money this go-round.”

The first $1 billion approved by the Senate last month for the program was used up in a hurry. Apparently a lot of people had clunkers they’d been considering getting rid of and jumped at the opportunity.

The program — known officially as CARS, or the Car Allowance Rebate System — allows up to $4,500 from the government for those trading in old gas guzzlers for new cars that get significantly better mileage.

Earnhardt said the problem with the program is that the demand for smaller cars has outweighed supply. Ford, Earnhardt said, is having trouble producing enough Focuses, Escapes, Fusions and Rangers.

He said a dealership in Virginia is sending someone to Salisbury today to pick up a new Ford F-150 pickup on the lot here. But Earnhardt said he agreed to the deal only if the Virginia dealership delivered an Escape to Salisbury in return.

“We’re using leverage with other stores,” he said.

Earnhardt said one of the positives about cash for clunkers is that the $4,500 rebate comes from the government and goes straight to the dealership.

“Everyone thought this was a gimmick and it’s not,” he said. “The money is out there. It’s guaranteed as long as the car qualifies.”

Among the stipulations, the cars being traded must be no more than 25 years old and get 18 miles to the gallon or less. The new vehicles can’t exceed $45,000 in price.

Robert Kurfees drove from Mocksville on Friday to close the deal where he was trading a 1990 Lincoln Town Car on a Ford Fusion as part of the CARS program. Kurfees said his Lincoln really wasn’t a clunker, but he couldn’t come close to the deal he was getting on his new car without the program.

“It’s a deal, I’m telling you,” Kurfees said of the offer that Cloninger was making him.

Through cash for clunkers, all trade-ins must be crushed, a fact that Kurfees said bothered him a bit.

“I hate to see it getting crushed,” he said of his Lincoln. “But if that’s the deal, that’s the deal.”

Kurfees said he approved of the program, noting that it’s typically large corporations and their CEOs who benefit from government deals.

“Why not let the little folks get a little something?” Kurfees asked.

At Ben Mynatt Nissan, Sales Manager Jeff Moore said he was glad the program was extended, though he also noted, “Getting money from the government is like pulling teeth.”

He said about half of the cars sold at his dealership over the past month were part of the cash-for-clunkers program. On most of those deals, Moore said, the dealership is still waiting for money from the government.

“It’s really cut and dry,” he said of the cars and trucks traded as part of the program. “They either qualify or they don’t. There’s no agonizing.”

Moore said there have been a few instances where individuals have been surprised to learn their cars didn’t qualify. Moore recalled one woman who thought her 1984 Oldsmobile Cutlass would surely classify as a clunker.

But he said the car was rated at 19 miles per gallon when it sold new, meaning it couldn’t be included. Moore said the woman was dismayed at the news, noting that her Cutlass doesn’t come close to that kind of mileage nowadays.

Source: Salisbury Post

by Neil Roland

WASHINGTON — The Senate added $2 billion to “cash for clunkers,” ending a week of suspense about whether the popular new program would have to shut down for lack of funds.

The bill, identical to the one that passed the House last week, now goes to President Barack Obama for his signature.

The administration has pushed hard for the new funding. Tonight’s 60-37 vote is a victory for the auto industry, Democrats and consumers who have unexpectedly flocked to near-empty showrooms since the program began July 1.

“This has been a highly successful program, probably the most successful of any in the stimulus package to date,” Sen. Carl Levin, D-Mich., said on the Senate floor today. The new funding will extend the temporary program through Labor Day and spur about 500,000 new auto sales on top of the 250,000 already completed, Transportation Secretary Ray LaHood has said. LaHood warned last week that the program would have to be suspended because its $1 billion fund would be depleted by Aug. 2.

“Cash for clunkers is a new engine for automakers; a tune up for the environment; and a jump start for communities across the country whose economies are dependent on a strong auto industry,” Dave McCurdy, CEO of the Alliance of Automobile Manufacturers, said in a statement tonight.

“We applaud the administration and the Congress for their efforts to ensure that consumers can continue to take advantage of this successful program.” Rapid legislative action The House reacted within 24 hours of that warning by passing the extension. In passing the same legislation today, the Senate acted a day before its month-long recess begins. The Senate rejected amendments from six Republicans and one Democrat that would have delayed new funding for at least a month and likely resulted in a suspension of the program.

Any amendments that passed the Senate also would have required approval by the House, which is in recess until after Labor Day. The Senate overrode some Republicans’ objections about the program’s management, cost and targeting of the auto industry.

“We’re going to subsidize the purchase of automobiles by stealing from our children,” Sen. Tom Coburn, R-Okla., said today. The $2 billion is to be transferred from a renewable energy loan-guarantee program funded under the stimulus package that was enacted last February. Congressional leaders have said they intend to replenish the Department of Energy funds. The clunkers program provides $3,500-$4,500 credits to consumers who swap trade-ins for new vehicles with higher mileage. Dealers are reimbursed by the government after furnishing the credits.

Congress responded in the past week with unusual speed to evidence that the program has invigorated the slumping auto industry and improved the fuel economy of vehicles on the road. Sales gains for several automakers In July, Ford Motor Co. posted its first U.S. sales increase in 19 months, buoyed by cash for clunkers. Percentage declines at General Motors, Toyota Motor Sales and other automakers were the lowest for 2009. GM, Toyota and Ford have responded to July sales surges by saying they will boost third-quarter production schedules or may do so.

The suspense about the future of the clunkers program began July 30 when a National Automobile Dealers Association survey found that stores had completed so many deals that the $1 billion fund would soon be depleted. The program was supposed to last until Nov. 1, or until the funds ran out, whichever came first. Dealers had filed rebate claims for only a fraction of the transactions.

Many dealers ran into computer and processing roadblocks, and a number of their applications were rejected for processing errors. LaHood met with lawmakers and NADA July 30, and said the program would have to be suspended that night. Hours later, the White House said the program was continuing but under review.

The confusion created day-to-day uncertainty among dealers about whether they were going to be reimbursed for any deals they completed.  NADA advised members to proceed cautiously with clunker deals because they faced a risk of not getting reimbursed.  The House passed its $2 billion extension on July 31, leaving only a week for the Senate to act.

Two pro-environment senators, Democrat Dianne Feinstein of California and Republican Susan Collins of Maine, said they wouldn’t support an extension unless the program was tightened to increase fuel economy. But they reversed themselves when the administration produced evidence that cars sold under the program averaged 25.4 mpg, a 61 percent increase over the 15.8 average of trade-ins, which were mostly trucks.

Source: Automotive News