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Car buyers cash in on government program

July 27, 2009|By MARLO BARNHART

TRI-STATE -- Not really in the market for a new car, Neal Redmond was just planning to have some brake work done on his 2000 Chevrolet Blazer a few days ago when he heard about the "Cash for Clunkers" program.

So Monday morning, Redmond took advantage of the $1 billion government incentive and got $4,500 off the sticker price of a new Chevy HHR at Douglas Motors in Hancock.

"It all started when we brought the Blazer in and asked to drive the HHR as a loaner," said the Little Orleans, Md., resident. He and his wife drove the new Chevy to Valley Mall and on the way back, they made their decision.

"My wife said she wanted that car," Redmond said, describing the Chevy HHR as a panel van. "It's cool."

Richie Grove, sales manager of Douglas Motors, said the program is a good deal for someone like Redmond who has a car that qualifies for the Car Allowance Rebate System program.

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Under the program, car buyers can get $3,500 for their old car if the new vehicle gets at least 4 mpg more than the trade-in and $4,500 if the difference is at least 10 mpg.

With trucks, minivans and SUVs, the mileage difference must be at least 2 mpg for the $3,500 rebate and 5 mpg for $4,500.

The intent of the program, signed by President Obama in June, is to get owners to scrap their vehicles in exchange for more energy-efficient models. At the same time, the program is expected to boost vehicle sales.

No money changes hands -- the amount is deducted from the sticker price. The dealer is reimbursed by the National Highway Traffic Safety Administration.

Bottom line, the $1 billion rebate program wants to remove about 250,000 inefficient vehicles from the highways.

The downside for dealers is that the rules dictate all "clunkers" traded under the program must be scrapped -- they can't be sold again as used cars.

"Used cars are already scarce now," Grove said. "This won't help that problem."

John Grist, vice president of sales for the Miller Auto Group in Martinsburg, W.Va., agreed, but he has a bigger concern.

"There is no system in place to tell us when the money is gone," Grist said Monday.

He said he envisions a day when a deal is made, the rebate is applied and then the dealership finds out the money has run out.

Still, the first Cash for Clunkers weekend was lucrative for Miller Auto Group, Grist said, with 30 to 35 rebate sales finalized.

Jerry Massey, president/owner of Massey Lincoln-Mercury and Massey Hyundai, said his dealership has a number of pending deals involving the incentive.

Massey said he has some questions about the requirement to destroy all engines in the clunkers and about whose responsibility it is to estimate the scrap value of each trade-in.

The Web site www.cars.gov has a listing of participating dealers in alphabetical order by state. But due to some problems with the sign-up process on Friday, several dealers in the Tri-State area weren't on the list yet.

The delay in listing all the dealers comes as the federal government is dealing with an overwhelming response to the program from car dealers, said Ellen Martin, spokeswoman for the U.S. Department of Transportation.

More than 20,000 car dealers have submitted applications to participate and each application must be evaluated to make sure Car Allowance Rebate System money is going into the right accounts, Martin said.

"We've never done anything like this before," Martin said.

Younger Toyota didn't appear on the list Monday afternoon, but Brandon Younger, president/owner, said he can't imagine any dealer not signing up. He said he got on board right away.

"It's a benefit to customers and a significant incentive that gets these clunkers off the road," Younger said. "We had a strong weekend and a lot of pending orders."

Younger shared other dealers' concerns about knowing when the money runs out. He said he planned to ask about that Monday afternoon during a Webinar that was supposed to spell out the details of the rebate program.

Doug Stahl, general sales manager at RBS Automotive -- and Hoffman's -- at 101 S. Edgewood Drive in Hagerstown, said the go-ahead came Friday when the dealership completed the registration process.

To be conservative, Stahl said weekend sales weren't finalized until Monday.

"Customers love it," Stahl said of the rebate program.

In Frederick County, Md., Tate Chrysler, 5629 Buckeystown Pike, Frederick; and Frederick Motor Co., 1 Waverly Drive, Frederick, are also on the list.

In Franklin County, Pa., only Shively Motors at 801 Lincoln Way West in Chambersburg, Pa., was on the list by Monday afternoon.

Miller Auto Group in Martinsburg, W.Va., wasn't listed Monday, but Grist said the firm signed up.

Staff writer Dave McMillion contributed to this story.

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