Morgan Hill’s only auto dealership and one of the city’s largest
individual sales tax producers has received a jolt from the widely
popular federal
”
Cash for Clunkers
”
program that ended Monday.
Morgan Hill’s only auto dealership and one of the city’s largest individual sales tax producers has received a jolt from the widely popular federal “Cash for Clunkers” program that ended Monday.
And the showroom bustling with customers seeking to take advantage of the cash incentive to get their gas-guzzling, decrepit autos off the road at the Ford Store Morgan Hill Friday was evidence that auto sales have consequently jumped, at least temporarily.
“My car needed to be replaced, and I’d rather have something that’s better for the environment,” said Matt Kelsey, a Saratoga resident who was in the process of trading in his 1990 Nissan Pathfinder for a Ford Fusion Friday afternoon. “I hope the program works out.”
Cash for Clunkers, officially known as the Car Allowance Rebate System, started July 1 and ended Monday night. It provided rebates up to $4,500 off the purchase of new vehicles that are more fuel-efficient than customers’ older cars that burn a lot more gasoline.
Kelsey’s Pathfinder, which had about 240,000 miles on the odometer, got about eight miles-per-gallon, and the Fusion he drove out of the lot was rated about 31 miles-per-gallon. With the $4,500 rebate he qualified for, the 2009 model’s sticker price dropped to about $17,600.
Originally scheduled to run until Nov. 1, the federal stimulus program has been so popular that the Department of Transportation announced its early ending this month. Of the $3 billion allotted for CARS rebates, nearly $2 billion had been expended on 457,000 transactions nationwide by Aug. 20, according to a statement from the DOT.
Ford Store owner Tim Paulus said overall he was pleased with the program, which increased his sales markedly up to the last minute. Just this past weekend, his dealership sold 28 cars, most of which were trade-ins for clunkers. He said a “normal weekend” would see about 14 sales.
Throughout the six weeks the CARS program ran, the Ford Store did about 100 cash-for-clunker deals, and sales for the current month are up about 40 percent from one year ago.
“(Cash for Clunkers) has generated a whole lot of activity, which is good for the car business as a whole, and a boon to customers to pick up $3,500 to $4,500 (in cash rebates),” Paulus said. “By and large it was very successful. It was a great shot in the arm, and it got people out and buying cars again.”
Citing reports from the DOT that CARS has already boosted production at Ford and General Motors manufacturing facilities, Paulus said the program has apparently accomplished its goal to “jump start” the auto industry, which has struggled significantly during the current recession.
But there was some confusion among customers who couldn’t meet the fine technicalities of CARS requirements, and disappointment among dealers who don’t know when the federal government will reimburse them for the rebates given to consumers.
Paul Dixon of Merced went to the Ford Store to try to trade in his clunker, a 1999 Dodge Ram pickup that averaged about eight to 10 miles per gallon. However, he found out when he sat down to start the paperwork that he had to have the car’s title in hand to transfer ownership to the dealer.
“I’ve lost the (title), so we don’t qualify,” said Dixon, who decided to proceed with the purchase of a new vehicle anyway, without the rebate.
And the Borello family of Morgan Hill also showed up at the Ford Store with the intention of trading their 1990 Ford pickup for a rebate and a 2009 F150 that roughly doubles the miles-per-gallon of the clunker.
“The (old) truck is not worth the rebate, and it’s 13 years old, so it’s time for an upgrade,” said Michael Borello, who was present with his parents, grandmother, girlfriend and other relatives at Ford Store Friday.
However, they hit a snag when the sales staff informed them that the clunker and the new car had to be registered under the same owner. While the old truck was registered to the family, they were purchasing the new truck for their company, Borello Farms.
Still, the Borellos were excited about the program. Michael Borello said his brother received a $4,500 CARS rebate to trade for a new Ford pickup a couple of weeks ago.
Early Friday evening, the Borellos were still trying to find a way to make their clunker deal go through.
Paulus added that the heightened demand created a strain on his inventory and his staff. On some deals, the Ford Store had to scramble to find the product customers wanted by trading with or buying from other area dealers.
Kelsey, 47, said his first choice was the hybrid model of the Fusion, but those were nowhere to be found in the Bay Area on the eve of CARS’ termination. He ended up at the Morgan Hill dealer because it was the closest one to his home that had a non-hybrid version.
Some customers also had trouble showing proof of one year’s consecutive past insurance on their clunker, Paulus said, since most car owners purchase insurance in six-month increments. That required some digging through paperwork in some instances.
Plus, the Ford Store has not been repaid for about $400,000 in rebates it has given to customers who qualified for a CARS exchange, Paulus said. The federal government has promised to repay the dealers, and Paulus thinks that promise will be kept. But he doesn’t know when.
Another goal of CARS, as with other recent stimulus programs, was to help clean up the environment by getting high emissions-producing technologies out of use. The clunkers traded in for rebates will be sold for scrap metal.
“It took a lot of really bad cars off the road,” Paulus said. “Some were fairly unsafe.”
