Trends

Real-World Cash for Clunkers

3808715790_393164d861

Photo: ThreadedThoughts

There’s no doubt that the recently extended Cash for Clunkers program is breathing new life into our gasping auto industry—and it is drawing attention to the kinds of cars it is intended to promote. Tracking of the 1.5 million cars viewed on AutoTrader.com shows that cars with good gas mileage have gotten a healthy boost in interest. The Prius, for example, showed a 212 percent increase in interest from May to June, and another 20 percent increase from June to July. Interest in the Hyundai Elantra increased 109 percent from May to June, then another 93 percent from June to July. In the same time period, all other cars showed an increased interest of around 30 percent.

The other big takeaway is that most of the buyers don’t seem to be those that were in the market anyway; they are new customers, attracted to the notion of getting a deal on a new car. “What dealers have seen is that many of the customers taking advantage of the program could best be described as misers—folks who would normally have driven their existing car until the wheels fell off then replaced it not with another new vehicle, but a used one,” says Brian Gluckman of AutoTrader.com. This may or may not be the case with the three new car owners we talked to. To learn what Cash for Clunkers could mean for you, we talked to three different individuals to get their real-world experiences:

Alex Bussey, A First Adopter

2001 Jeep Grand Cheroke to a 2009 Elantra
$18,000 minus $4500 in Clunker money and other rebates = $12,000

Alex Bussey of Asbury Park, NJ first heard about Cash for Clunkers before the top blew off his existing car, in a mention on the New York Times web site. He did a little research and it became very clear what to do next: get his paperwork in order and get his Jeep to a dealership pronto.
Though he thought the program was completely clear from poking around on CARS.gov, “it was a different story at the dealership,” he says. The dealer was pretty confused about the site they had to register on so they repeatedly called Busey back for more information.

In addition to dealers complaining about the bureaucracy of the program, there has been some backlash from consumers who say their tax dollars shouldn’t be going to replacing functioning cars with fancy new ones. To this Bussey provides an anecdote: He grew up in a little town in New Jersey, where there were lots of senior citizens.“ They said they didn’t want to pay taxes to help the schools, but we still paid taxes to help the senior citizens,” he said. “This debate is nothing new, only now it’s a little more… substantial.” He says, yes, the program is obviously costing someone, but that he finds the plan “ingenious” because it is helping out the consumer and the car industry in one swoop.

Bradley Chambers, A Convert

1998 Nissan Pathfinder to 2008 Jeep Patriot (new)
$23,000 minus $4,500 of Clunker money and other rebates = $16,600

Bradley Chambers first heard about Cash for Clunkers from his wife. She forwarded on a Yahoo email that made him rethink his 1998 Nissan Pathfinder, which he says smelled a pretty funky and was definitely worse for wear. He knew that he needed a new ride, but the Chattanoga, TN resident said he’s not a new car kind of guy.

First of all, he doesn’t like financing anything or carrying around debt—the obvious reality for most new car owners. “I’m the cheap one,” says Chambers, referring to his relationship with his wife. He was also a little weary of the Cash for Clunkers program because he doesn’t like big government spending programs in general. “When I got my $600 back from the government for my tax rebate last year, I put it straight into savings,” he says. “And I think that’s what most people did.” But this program is different in Chamber’s eyes because he actually had to go out and buy something, directly stimulating the economy. For that reason, he’s definitely a fan of the program now.

He crossed the nearby Georgia boarder for a special deal he heard about in a TV ad for a 2008 Jeep Patriot still on the lot. His new car cost a lot less than the Kelly Blue Book value. The process, in all, wasn’t too confusing for Chambers; It was the dealership which seems to still be working the details out. But when they do, the program will definitely provide dealers with a kickback, by Chambers’ reckoning. Most of the Jeeps that he saw at the Georgia dealership were selling at sticker value, Clunkers money or not.

In the end, Chambers said he’s happy with the program, if they continue to use the existing stimulus money on the CARS program, transferring it from other projects, he’ll remain a fan, even though it’s against his nature. “In my office we were joking that everybody bought me a new car,” he says, but he still thinks the program works because it is measurable: The government can say they got X amount of cars off the road and can count the environmental impact of the program.

Vince Iulianetti, A Proponent

From a 1994 Dodge Dakota to a 2009 Honda Accord
$19,500 minus $4500 of Clunker money = about $15,000

Vince Lulianetti is a business savvy guy. He’s the host of a business talk show on LA Talk Radio, and he’s definitely a fan of the Cash for Clunkers program. “It is an excellent program. For the people buying, the dealership, the manufacturer, and every state participating—a lot of people benefit from this program,” says Lulianetti.

The Lewes, Delaware resident said he was bombarded with information about the program, so it was pretty hard to miss. He had an old truck and his wife was in need of a new car, though he wasn’t actively on the market, so it just made sense. He found the process to be clear enough on his end. His son is a general sales manager at a car dealership, so he naturally knew where to go.

Lulianetti recognizes some peoples’ complaints that the program is taking good cars and junking them, but he said he still defends his support of CARS. His new car is consuming 10 mpg less in gas, and those numbers add up. And, he adds, no one knows where gas prices are going next. “Yes, maybe it is taking some good cars off the road, but they should be off the road,” says Lulianetti.

His only complaints about the program? That it should have started around 6 to 8 months ago when the auto industry was really hurting so the money could’ve indirectly trickled down to factories. Also, he would like to see a government entity running the program that is a little more familiar with how the dealerships work and one with a more intimate knowledge of the auto industry.