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Cashing in on program
Dealers weighing pros, cons of clunkers
Clunkers 4
Andean Chevrolet’s John Otwell collects paperwork needed to submit a car for the “cash for clunkers” program. - photo by Jennifer Sami
Tuesday afternoon, Patty Morton drove her 1996 Jeep Cherokee Sport to Andean Chevrolet and left in a brand new Cobalt.

That may seem like a regular trade-in, but the $4,500 she got for the gas-guzzling clunker with 250,000 miles on it was more than she thought possible.

Like about a quarter million other “clunker” drivers, Morton took advantage of the federal government’s Car Allowance Rebate System, dubbed “Cash for Clunkers.”

The program offers $3,500 or $4,500 to car and truck owners who trade in their poor gas mileage vehicle for a new, more fuel-efficient one.

The plan was designed to remove the country’s highest polluting cars from the roads, while also helping drive up auto industry sales.

For Morton and her brother, who traded in his clunker Saturday, “this was a break people like me need.”

Bill Howell, vice president of Billy Howell Ford-Lincoln-Mercury, said he’s sold nearly 30 cars as a result of the program.

But for Howell and other area car dealerships, the sales have been bittersweet.

The program, which began July 24, requires dealerships to front the money for the rebates.

Though it’s been less than two weeks, Howell hasn’t been reimbursed for any of the nearly $120,000 he’s shelled out for the clunkers.

When dealerships enter a clunker’s information on the government’s Web site, there is no instant verification process. That means there’s a chance a car may not qualify.

Essentially, dealerships follow the rules and assume they will be reimbursed, but there’s no way to know until they receive money from the government.

“Fortunately, our cash position is very good,” Howell said. “But it’s going to put a big, big, big cash squeeze on a lot of other dealers.

“I appreciate the extra sales, and the customers have taken advantage of it, but it is certainly scary because [trade-ins] are in a pending status, so they’re not rejected or approved. But it’s worth it.”

The Ford Motor Company has reported the first increase of any major manufacturer this year, according to its Web site.

Dealerships reported nearly 118,200 retail sales in July, up 9 percent compared to one year ago.

As with national sales, Howell said the Ford Escape and Fusion have been the most popular models.

Jerry Williams, Andean’s general manager, said the Cobalt, Malibu and Impala have been its most popular cars. The Colorado and Equinox have been the most popular truck and sport utility vehicle.

Williams said he’s noticed a July sales increase of about 25 percent over June.

“It’s a really good program,” he said. “We’re taking a bunch of those old gas guzzlers off the street and putting some of these more fuel-efficient vehicles out there so we won’t be so dependent on that foreign oil.

“We’ve had a little difficulty as far as submitting for the deals ... but they’ve worked out some of the kinks and it’s going a little
smoother now. I don’t think they expected this program to be nearly as successful as it has been.”

Not everyone is eligible for the program.

There are multiple requirements, including a vehicle’s age and fuel economy rating. In addition, the owner must have owned and insured the vehicle for at least one year.

Williams has a couple of trucks in the clunker collection that are less than a decade old, but qualified because of their poor gas mileage.

But most vehicles that have come in are in bad shape, said Howell, who got one clunker that was barely running.

“It had 250,000 miles on it with a broken odometer,” he said. “It’s still running, but it may have had 500,000 miles on it.”

Clunkers from both dealerships are sitting in the back lots. They cannot be resold, but they can’t be sent to the scrap yards until the dealerships have received reimbursement.

There also are many rules for how the old cars must be disposed.

It’s been a difficult program to follow, but Williams said it has “brought people out that wouldn’t normally buy.”

“Anything you do is going to have a little bit of hassle in it,” he said. “But the positive aspect of it far outweighs any negatives that I’ve seen.”

E-mail Jennifer Sami at