Clunkers program jump-starts business at Sonoma dealerships

With a second round of federal funding approved for the “Cash for Clunkers” program, Sonoma’s car dealerships expect to see more foot traffic in their showrooms through October. The program gives buyers a $3,500 or $4,500 discount for their trade-in vehicle when purchasing or leasing a new vehicle with better gas mileage.
“It has absolutely driven people to the lot” said John Preston, general sales manager of Holder Ford. “It’s a win-win, for the dealership and the customer.”
Sonoma Chevrolet has made several of the clunker deals, according to owner Dan Roseland, who said 90 percent of the shoppers on his lot last week were motivated by the “Cash for Clunkers” opportunity. “There has been a sales increase,” he said. “I’m glad the program hit.”
The initial federal $1 billion allocation was supposed to run from late July until November. It proved to be so popular that most of the funding was gone after just one week. Last Friday, an additional $2 billion was approved to keep it going until funds run out, probably around November 1.
“It’s a pleasant surprise how effective it’s been,” Preston said.
The goal of the Car Allowance Rebate System (CARS) is to stimulate the economy while getting gas efficient new cars on the road in place of old, and often unsafe, gas guzzlers. For a consumer to get the full $4,500 voucher, the trade-in vehicle must get 18 miles per gallon or less. Additionally, the new car’s fuel economy must be at least 10 mpg better than the trade-in.
A $3,500 voucher is available if the difference in fuel economy is 5 mpg for cars. Figures for SUVs, pick-ups and crossover vehicles vary. The trade-in vehicle must be less than 25 years old, and it must have been registered and insured continuously for the last year.
Preston pointed out that unlike a rebate deal, which is subject to sales tax, the voucher is a discount straight off the top. “You don’t pay tax on it,” he said. “There’s another $450 savings right there.”
The voucher value is deducted from the negotiated price of the sale or lease. The consumer gets the deal right away; the dealer waits to get reimbursed by the government.
“It’s a great deal for the customer,” Preston said, adding that to some, it sounds almost too good to be true. “People can be skeptical.”
The fate of the clunker itself is sealed with a dose of liquid glass into its running engine, causing it to freeze up. A wrecker then takes the disabled vehicle to a salvage yard to be crushed and cubed.
Preston discounted one of the rumors that has cropped up that the clunkers somehow wind up back on the used car market. “There’s no way that can happen,” he said.