- Posted August 19, 2009 by
Los Angeles, California
This iReport is part of an assignment:
Cash for clunkers ending
Dealership answers questions about Cash for Clunkers. Is it working?
Last week I wrote an article called “Cash for Clunkers: What it is and why it doesn't work”. The reactions were split half and half, some of you agreed with my analysis, some of you did not. I decided to go straight to the source and find out exactly how this program is affecting dealerships. I found an employee at a Chrysler-Jeep-Dodge Dealership in Northern Illinois who was willing to be interviewed. She did not want her full name disclosed, so I'll refer to her as “Megan N.”.
Natasha Bishop: Has your dealership seen a boost in cars sales since the cash for clunkers program started?
Megan N: You should see our lot of vehicles, we have about ten new cars left and over twenty cars that are waiting to be taken away by the junk yards for
cash for clunkers.
Natasha Bishop: Ten total for the entire lot? That's not many. I know the Chrysler plants stopped production, have they started up again?
Megan N: The Chrysler-Jeep-Dodge plants just started producing vehicles again, however, we've been told that the first batch of cars are going oversees. How is this supposed to help the United States economy when we are sending our cars oversees? The Toyota, Honda, Lexus dealers all have plenty of cars to sell for cash for clunkers, because they never stopped production.
Natasha Bishop: My understanding of the program is that a customer comes in with their clunker and they hand it over to a dealership for a credit of $2500 to $4500 towards a new car. Does the customer immediately get to take the new car home?
Megan N: The dealership must release the sold car even if government money has not yet been received.
Natasha Bishop: Your dealership hands over the new car before any rebate money is seen?
Megan N: Dealerships are having to front the cost and hope that they will get reimbursed by the government. Many dealerships would like to hold onto the sold car until they receive the government money.
Natasha Bishop: That seems like a big risk for dealerships. Why can't dealerships hold cars?
Megan N: The government is telling customers to report dealerships as they MUST release the car to the customer at time of purchase.
Natasha Bishop: How does the dealership get their rebate for each clunker sale?
Megan N: There are well over 20 pages of paperwork the dealership must fill out for each “Cash for Clunker” sold vehicle. If there is one mistake on this paperwork the government will deny that dealership the money “rebate” for that sold vehicle. There are NO second chances to re-do this paperwork.
Natasha Bishop: Sounds like dealerships could potentially lose millions of dollars from this program. What happens to the clunkers when they are turned over to the dealership?
Megan N: The vehicles that are being traded in as part of the “CFC” program are having there engines seized by that dealerships technicians. Then these vehicles are being towed away by authorized junk yards and scrapped.
Natasha Bishop: One of the first problems that entered my head when I heard about this program was that it could potentially hurt the people it was aiming to help, the lower income families. Several people left comments on my column page disputing this idea in my last article. Let me ask you. What is the condition of the majority of clunkers being turned in to your dealership?
Megan N: Several of the vehicles are in reasonable shape and that is a problem. There are always going to be teenagers that need a “good first car” and the government is intentionally taking those cars away from potential buyers. Also, low income citizens, as well as citizens that just want to save some money, are also in the market for affordable used cars. A dealerships “used car” selection is being reduced and thus used car profit is declining.
Natasha Bishop: What is your personal opinion of this program based on what you have seen at your dealership?
Megan N: My personal opinion, there is usually a reason why a person has a clunker for a vehicle. This reason is that they can not afford a new vehicle. Now, even if these customer’s are able to get financing for a new vehicle they may still be getting loans that they most likely can not afford. There are always going to be the “haves and the have not’s.” It is not my responsibility, as a tax payer, to see that the “Have Not’s” now become the “Haves.”
To read my previous article: “Cash for Clunkers: What it is and why it doesn't work”
For more information on cash for clunkers: cars.gov
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