Auto dealers swamped as trade-in rebate ends

By @ibtimes on

Americans swamped auto dealerships on Monday during the final hours of the government's popular cash-for-clunkers program, which offered rebates of up to $4,500 to trade in older gas guzzlers.

Dealers from California to Texas saw lots empty of cars, pickups and SUVs over the weekend, as once-reluctant customers were lured back into the market by the $3-billion rebate program that ended at 8 p.m. EDT Monday (0000 GMT Tuesday).

The White House Council of Economic Advisers forecast the program would boost the U.S. economy by 0.3 to 0.4 percentage points in the third quarter.

It's been crazy. We've had lines of customers, said Scott Gruwell, the sales director at Courtesy Chevrolet in central Phoenix, which has sold 58 new vehicles since Friday.

We've had the best weekend in literally a year-and-a-half to two years, he added.

The rebate program, which started last month, sought to spur sales in the struggling auto industry while helping the environment. It offered $3,500 to $4,500 to people who traded in a car made since 1984 with lower fuel mileage for a new, more fuel-efficient one.

A lot of these people were trading in cars in the 15-year-old range, and I don't think they had any intention of buying a car -- at least not a new car, maybe a used car, said Mike Szatmary at Brademann Toyota in Park Ridge, Illinois.

But I think we took a lot of people on the sidelines and put them back in the game, he added.

As of Monday, the U.S. Department of Transportation reported more than 625,000 dealer transactions worth $2.58 billion in rebates.

It extended the deadline for dealers to file their paperwork until noon EDT on Tuesday after a website handling their applications crashed on Monday under a crush of heavy traffic.

It's just been really positive, said April Ancira, the vice president of Texas-based Ancira Motors. We were in a situation where we had too much inventory. Now it's the complete opposite.

BACKLOG IN PROCESSING

Lawmakers and the Obama administration had to scramble earlier this month to add $2 billion in funding when the program's initial $1 billion was quickly exhausted.

White House spokesman Robert Gibbs said last week there were no plans to seek more funding or an extension for the program, which offered a trade-in credit on qualifying vehicles with fuel economy of 18 miles per gallon or less.

(It) was designed to be temporary and has been enormously successful, so much so that we're winding it down, Gibbs told reporters.

To keep up with huge demand ahead of the program's closure, Gibbs said the government had tripled the number of workers processing applications.

Nevertheless, it faced some complaints over the weekend and on Monday from dealers who reported trouble finalizing paperwork and delays in receiving government reimbursements.

Automotive News, an industry trade publication, reported on Monday that two-thirds of respondents to an online dealer survey last week had not received a single payment under the program. More than half said they were not confident they would be fully reimbursed for deals.

David Handley, sales manager of Sierra Autocars in the Los Angeles suburb of Monrovia, California, said his Subaru/Mazda dealership did its last clunker trade-in on Sunday evening to ensure plenty of time to complete the paperwork.

I probably have some people right now I could sell cars to, but we can't take the chance on not being able to get them into the government system (for reimbursement), he said.

Handley said the owner brought in about 10 extra people over the weekend just to handle the backlog of documentation, which he said requires about 90 minutes of paperwork per deal.

Other auto dealers said they were worried about making a potentially costly mistake in the rush to complete paperwork.

Some of the bigger dealers that have a couple of hundred reimbursement requests in the works, it adds up to a whole lot of cash, said Alan Black, general sales manager at Chuck Fairbanks Chevrolet in the Dallas area.

And, if you make a mistake and they don't pay, you've just lost $4,500 on a $200 car.

(Additional reporting by Jim Forsyth in San Antonio, David Bailey in Detroit, Andrew Stern in Chicago, Steve Gorman in Los Angeles, and Patricia Zengerle and John Crawley in Washington; Editing by Phil Stewart and Paul Simao)

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