“Once the program ended, we stopped dead,” Stamey Hardin, owner of Thomasville GM Superstore on National Highway, said. “I don’t know if it helped or hurt.”
While Cash for Clunkers sparked the sale of new cars during its six-month run last summer, the program did not have any staying power, resulting in a trickle down effect of inefficiency that impacted used car dealers, people looking for a pre-owned vehicle and junk dealers. Hardin said his dealership managed to sell more than a dozen cars through the program, but a lot of the sales were to people from out-of-town. This resulted in less work for the service department.
“It pulled people in who were going to buy, but it wasn’t a lot of local folks,” said Hardin. “We want to service the local community and take care of their vehicles. We were advertising heavy discounts at the same time so we were double-dipping. Basically, we didn’t make any money off the cars.”
Dealerships across the country also were put in the position of fronting all the rebate money, stripping companies of vital cash flow while the wait for government checks ran well over a month.
“The payments were slow coming to the dealers,” Hardin said. “It took us a good six weeks to get our money back. Cash is king and we had to front all the money, making it very tough.”
Once Cash fro Clunkers expired, sales of new cars came to a crashing halt. With no more rebates to go around, consumers started backing away from investing $20,000 in a more full efficient vehicle.
“Sometimes you get a false sense of security to go out a buy a car for this,” said Hardin. “When the faucet is off, that doesn’t happen any more. It just stopped dead. I think it was a good idea to try and stimulate the economy. It worked during that period of time, I’m just not sure of the timing of it.”
With consumers no longer willing to purchase new cars, pre-owned vehicles became a hotter commodity which, in turn, drove up the price. Throw in the fact that thousands of vehicles that still had value were ushered useless after glass got poured into the engine and a shortage of quality used cars develops.
“Since they stopped the Cash for Clunkers, new cars aren’t selling,” Keith Miller, owner of Carolina Motors at 720 National Highway, said. “People are buying more used cars and aren’t out looking to spend $20,000 for a new car. The supply isn’t meeting the demand. I’m having to pay more for the cars. More franchise dealers are buying used cars to stay in business, making it higher for me.”
Miller said junk dealers he knows also are being affected as engines are now harder to find, along with other valuable parts. Since Carolina Motors is a ‘buy here, pay here’ dealership, Miller said he has been able to withstand the economic downturn as banks continue making it difficult to finance a car.
Cash for Clunkers may have been a short-term fix to a struggling economy, but the program’s lasting impact appears to be a lemon.
Staff Writer Eliot Duke can be reached at 888-3578, or duke@tvilletimes.com.
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