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Some dealers say Cash for Clunkers a bad deal

August 17, 2009|By DAN DEARTH

HAGERSTOWN -- Several new- and used-car dealers say the Cash for Clunkers program is bad for business.

Congress passed Cash for Clunkers in July to replace gas guzzlers with new, more fuel-efficient vehicles. The program, which has a $3 billion budget, offers car buyers federally backed incentives of $3,500 or $4,500.

Cars and trucks that are traded in as part of the program are scrapped.

"The vehicles being destroyed are the ones my customers can afford," said Julie Stine, owner of Diamond Motor Cars at 201 Frederick St. in Hagerstown. "We have noticed that it has hurt us in the availability of the used-car market."

Stine said it is harder to restock her inventory because the provision in Cash for Clunkers that requires trade-ins to be destroyed reduces the number of used vehicles on the market.

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As a result, used-car dealers pay more at auction to buy vehicles to fill their lots, said Bob Artz, manager of Salem Avenue Auto Exchange at 1433 Salem Ave. in Hagerstown.

"It goes back to supply and demand," Artz said. "It really made a difference on us being able to buy vehicles. The supply just isn't there."

Damon Schoen, general sales manager of Hamilton Nissan at 1929 Dual Highway, said his dealership has been participating in Cash for Clunkers since July.

He said the program is "a good deal" for consumers and the environment, but several new-car dealers are waiting to see the benefits.

"Everybody's screaming right now," Schoen said. "Nobody's getting paid."

Schoen said the federal government has reimbursed Hamilton Nissan for only four of the dealership's 70 claims.

He said the main problem with Cash for Clunkers is that the program was created by "bureaucrats rather than car people."

A majority of the Hamilton Nissan customers who participate in the program are trading in sport utility vehicles for more fuel-efficient Nissan Sentras and Versas, Schoen said. After the deals are made, dealerships have seven days to transfer the clunkers to a certified salvager.

Jerry Massey, owner of Massey Hyundai at 1706 Massey Blvd., said about 49 percent of his new-vehicle sales since July have been generated by the Cash for Clunkers program.

He said the only problem is that he hasn't seen a dime from the government, which has failed to reimburse him on all 50 of his claims.

"I'd like to get the money that's owed to us," Massey said.

He said he hopes the government starts to reimburse dealerships as soon as possible to prevent cash-flow problems.

The delays probably are the result of the government not having enough employees to process the claims, Massey said.

On Monday, an official in the Obama administration said the U.S. Transportation Department hoped to have 1,100 public and private sector workers processing the vouchers by the end of the week, up from a work force of about 350 through the end of last week.

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