Dealers Marketing Cash-For-Clunkers Deals
Sales-starved automakers have begun an ad blitz to coincide with the kick-off of the so-called cash-for-clunkers program that gives government rebates to people who trade in older vehicles for new ones that get better mileage.
What triggered the flurry: The government published rules Friday for the Consumer Assistance to Recycle and Save (CARS) program. The program has been in effect since July 1, but it's been unclear until now how dealers and buyers are to use the system.
The government makes an electronic transfer of $3,500 or $4,500 to the dealer for each qualifying sale. The dealer has to ruin the engine of the trade-in so it never can be reused, then send the vehicle to a scrap yard.
CARS runs until Nov. 1, or until its $1 billion budget is gone. The government website www.cars.gov has full details.
Generally speaking, the new car has to be rated 22 miles per gallon or more by the government in combined city-highway driving. The trade-in can't be older than 1984 and has to be rated 18 mpg or less. Ratings are at www.fueleconomy.gov.
Trucks are more complicated. In some cases, the new one doesn't need to get better mileage than the old one, as long as the new one is no bigger, measured by a specification called gross vehicle weight rating.
"It's good for everybody, for the customer and the dealer," says Terry Miller, manager of Los Angeles dealer Galpin Ford.
Galpin has heavily promoted CARS and had collected about 40 clunkers by the weekend, most battered and worn out, and worth about $200 or $300, he says. As CARS trade-ins, though, they're worth up to $4,500.
Some shoppers find their vehicles are worth more than a CARS voucher. But with unexpected value in their used cars, they're still in a mood to buy. "We can do some extra deals," Miller says.
Surprisingly, many older models are too fuel-efficient to qualify.
For example, a popular 1984 Chevrolet model, the Celebrity with six-cylinder engine, is rated 19 mpg, so it wouldn't qualify. Nor would the 22-mpg 84 Ford Tempo, another popular sedan.
The past decade's top-selling Honda Accords and Toyota Camrys are rated 20 mpg and more, so they aren't eligible trade-ins. A big Ford Crown Victoria, at 18 mpg, barely qualifies.
Conversely, many new models exceed the required 22 mpg. Versions of the Ford Focus, Chevrolet Malibu, Nissan Altima, Honda Accord and Toyota Camry, among others, are in the mid-20s.
That shows the target isn't high enough, and the measure won't do enough to boost overall fuel economy, says the Center for Auto Safety, a Washington, D.C., activist group.
"It's a boondoggle," says Rosemary Shahan, president of Consumers for Auto Reliability and Safety in Sacramento. The program should include incentives for purchasing fuel-efficient used cars, too, she says, because those are better bargains.
A quirk: Expensive new cars can qualify. The regulations set a maximum window-sticker price of $45,000, but that's the base price, before adding options, dealer accessories and shipping.
For instance, a loaded $60,000 BMW 335d sedan qualifies because it's rated 27 mpg and is $43,900 before options.