‘Clunkers' Program Brings Good News and Problems for Dealers

Because of the amount of increased lot traffic -- not just from “tire kickers” but serious buyers during the past month -- the Cash for Clunkers program has created excitement in the auto industry, according to the Aug. 17 Beggs on the Used Car Market Report by Black Book Vice President and Managing Editor Ricky Beggs.

But that excitement has been tempered by the potential problems caused by the limited inventory remaining, especially the more economical units that generally would get the full $4,500 credit.

In addition, some dealers have expressed concern because they have yet to be reimbursed for their clunker claims, with some dealers halting their participation in the program until they get some funds reimbursed.

All of the dealers that Black Book interviewed said they had gotten business due to the clunker program, even though many of the deals weren’t funded by the program. Black Book also saw one report stating that almost 80 percent of the clunker claims have been denied.

With dealers reporting that they are getting an additional 25-40 percent of the number of clunker deals as regular trades, Beggs said he is seeing a significant number of trades coming in. This makes Beggs feel the buy here, pay here inventory won’t dry up as much as some had initially thought might happen. “The rush may be over,” Beggs said. “Have you thought what might happen to the new car activity when the funds run out or the program ending date arrives on Nov. 1?”

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