House Votes More Money For 'Clunkers'

August 01, 2009|By Eileen Ambrose and Andrea K. Walker | Eileen Ambrose and Andrea K. Walker,eileen.ambrose@baltsun.com and andrea.walker@baltsun.com

The wildly popular but cash-strapped cash-for-clunkers program is set to get a $2 billion infusion, and Maryland auto dealers that have been racking up sales are expected to continue offering federal incentives at least through the weekend.

On Friday, the House of Representatives voted 316-109 to pour billions of dollars more into the program, and the Senate is expected to take up the matter next week. Sen. Carl Levin, a Michigan Democrat, said the Obama administration had assured lawmakers that "deals will be honored until otherwise noted by the White House."

Peter Kitzmiller, president of the Maryland Automobile Dealers Association, said he hopes the government includes a firm date on when the program will end so dealers and consumers aren't scrambling to find out whether they will get the money.

The government initially set aside $1 billion for the program, officially called the Car Allowance Rebate System. It aims to get polluters off the road and help the ailing auto industry by giving consumers $3,500 or $4,500 to scrap old vehicles and buy or lease new, more fuel-efficient models. The program applies to sales from July 1 through Nov. 1, or until the money runs out. A week ago, the government posted program details online and allowed participating dealers to start registering.

Rumor starts rush

Since then, sales have jumped, and by Thursday night word spread that the money had run out and that the program would be suspended at midnight.

About 9 p.m. Thursday, Mike Shuman, general manager of Nationwide Nissan in Timonium, heard that the program might be suspended. He called in staff, and they contacted buyers to come in and complete sales before time ran out.

Shuman said he sold 13 cars under the clunker program in roughly three hours. "It's been a long time since I have seen a showroom so busy and at that level of energy that was happening last night," he said Friday. "It was almost ... panic buying. People felt that if they didn't make a decision, they would miss a golden opportunity."

By midafternoon Friday, the dealership had sold another 10 vehicles under the clunker program.

Mary Wolfson had been looking for a new car for about a year, and the clunkers program added urgency to her shopping.

"I knew I needed to move," the Baltimore resident said. But Wolfson wasn't sure she'd moved fast enough when she heard on the radio Thursday night that the program was ending. She called several dealers that night to see if they would be offering the incentive the next day. Some weren't sure.

By Friday morning, Wolfson said she was more confident that Congress wouldn't let the popular program die. On Friday afternoon, she turned in her 2001 Chrysler minivan with 137,000 miles and bought a Nissan Rogue SL for $20,000. She figured she saved about $10,000 with the $4,500 clunker money and dealer and manufacturer incentives. Had the incentives not been available, Wolfson said, she probably would have bought a less expensive vehicle.

Dick Bernhard, a volunteer chaplain in Needmore, Pa., said he likely would have delayed his purchase of a new vehicle by six months or more if not for the federal program. He scrapped a 1997 Jeep Wrangler with 143,000 miles and used his $3,500 incentive to buy a 2009 Dodge Caliber on Friday. He called the dealer in Hancock to make sure the incentive was still available.

Bernhard said he's not a fan of such government programs, but added, "In my case, it did move a car."

A shot in the arm

Sen. Debbie Stabenow, a Michigan Democrat, said 40,000 sales had been completed and dealers had 200,000 waiting to be completed. The initial program was expected to support about 250,000 vehicle sales.

The National Highway Traffic Safety Administration, which oversees the Car Allowance Rebate System, said it does not have figures on the number of vehicles sold under the program.

"We are still waiting for numbers. The program is still ongoing," said spokeswoman Patricia Swift-Oladeinde, whose office has been inundated by calls. She said the agency did not suspend the clunker program and does not know how the rumor started. For updates, consumers should check online at www.cars.gov, she said.

The program appears to be a shot in the arm to an industry that has been suffering weak sales. Even some dealers were surprised by how quickly the program blew through its money.

"We were predicting that they would run out at the end of August. I sure missed that," said Steve Douglas, owner of Douglas Motors Inc. where Bernhard bought his car.

Douglas said he's sold four vehicles under the clunker program and planned to get his paperwork in to the federal government by the end of Friday to make sure he gets his money.

Mike Harrison, executive manager of Sheehy Nissan in Glen Burnie, said he wasn't surprised by how fast the program ran out of cash, given the interest among consumers. "I had a suspicion the money might not last long," he said.

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