Auto dealers: Cash for Clunkers program yielded mixed results
PARK RAPIDS -- Nine months after the Cash for Clunkers program ignited a frenzy in the auto sales market, the program's long-term effects are now being assessed.
And Park Rapids auto dealers say it's a mixed picture.
Sure, the short-term sales were good for the industry, but in 2010, dealers are now coping with a shortage of affordable used cars and parts.
"We've had a half-dozen people in here lately looking for something in the two, three $4,000 range," said Mark Andersen of Park Rapids Auto Centre.
Last week, a couple looked over the lot, asking for something in the $2,000 range. Andersen pointed to the only model close, a vehicle listed at $2,995. The couple nodded no and left.
"You can't find anything in that price range," Andersen said. "They're just not out there."
The federal Cash for Clunkers program gave $3,500 to $4,500 trade-in values for clunkers on new cars. Many auto dealers, to unload their bloated inventories, added a matching trade-in.
"Why would you sell your car for $1,000 when you could have gotten $8,000 for it?" asked Don Trumble, a mechanic at Park Rapids Auto.
"It took a lot of the affordable used cars completely out of the market," agreed Roger Anderson at Park Rapids Ford.
"We used to have a bargain lot with cars (priced) starting at $500 and on up. (Cash) for Clunkers eliminated that pretty much," he said.
Both Andersen and Anderson say they'd give their eyeteeth for some cars priced under $5,000.
It's the income tax season and many people have money they want to spend.
"They come in here and say, 'We've got two to $3,000 to spend,'" Anderson said. "We tell people we can try to find something but most of 'em want it and want it now.
"Everybody that would have bought a $3,000 car now has to step it up and buy something in the $5,000 to $7,000 range."
And Anderson said that takes many potential buyers out of the market altogether, because it could entail financing that's hard to come by.
Anderson said the Cash for Clunkers program "took new car buyers out of the market prematurely that were thinking about it and decided to go ahead and pull the trigger."
Both auto dealers say the result hasn't been gloom and doom, but they've felt the aftershocks.
Park Rapids Ford has benefited by a switch from selling Chryslers to selling Fords.
It was a good business move, Anderson said.
Ford is riding high on a wave of national good will. It offers American-made cars, many affordable and reliable, and it didn't take a government bailout. The company is now well positioned to capture some business from Toyota, which is mired in recalls, he noted.
Although many people are driving new cars that need minimal service, both dealerships say they have gotten a much-needed boost from their service departments.
But again, Cash for Clunkers impacted that market, too.
"It eliminated a lot of parts, smashing all those cars," Anderson said.
And parts and car sales, being in a business of supply and demand, have seen price hikes due to their scarcity.
"I used to go to auto auctions in New York Mills and Fargo fairly often," Andersen said.
He hasn't been to a market this winter at all.
"Prices have gone up," he said.
For Park Rapids Auto Centre, a customer following that borders on the fanatical has tided the dealership through. They return, time after time.
If you bring your car in for service, you not only get a ride to and fro, but if you're in a bind for transportation, Mark Andersen hands you the keys to his own car.
"Our customers have been real good to us," he said.
Sarah Smith is a reporter at The Park Rapids (Minn.) Enterprise, which is owned by Forum Communications Co.