Dealers expecting spike in sales with some 'Cash for Clunkers'
With all the gloom surrounding the auto industry as of late, Mike Macik, the general manager at Olivia Chrysler Center, appears to be in a unique position.
Instead of worrying that the Chrysler dealership in Olivia will be stuck with a fleet of unsold vehicles, he's fretting over whether or not he'll be getting enough cars from manufacturers to keep up.
"As long as we can just keep the cars in stock, that's kind of our battle right now," he said.
Macik's optimism stems from a new federal program, officially begun Friday, which will allow qualifying consumers to scrap their old gas guzzlers for a rebate on a new, more fuel efficient vehicle. New car dealers throughout the area are expecting an upswing in sales of more fuel efficient vehicles as a result.
The $1 billion program, coined "Cash for Clunkers" but officially called the Car Allowance Rebate System, was signed into law by President Obama in late June. Lawmakers hope it will increase sales for the nation's troubled auto industry and the overall fuel efficiency of vehicles on the road.
All qualifying transactions from July 1 to Nov. 1 are covered under the program, assuming designated funds do not run out before then.
Macik said that he has sold three cars with the program so far, even though its requirements weren't set in stone until Friday. He expects more fuel efficient Chrysler models like the Dodge Caliber and Dodge Avenger will be big sellers throughout the four months that the program is in place. They'll also be harder to come by, he said.
"Some of these fuel efficient models have been slow sellers for a while. Now, they'll be blowing out the door," he said.
Though he hasn't sold any cars under the new program yet, Pat Walsh, owner of Atwater Ford, said a lot of customers have been curious about it.
With the requirement that trade-ins get fewer than 18 miles per gallon, he said many older Ford models don't qualify.
"Our cars get too good of gas mileage," he said.
Still, he expects people will be bringing in old Ford Explorers or F-150s in the months ahead to trade in for more fuel efficient models. That, in turn, could be a strain on what he said is already a tight inventory.
Still, he said, that's never a bad position to be in.
"Scarcity is much better than having too much on hand," he said.
But not all auto dealers will benefit from the program. Used car dealers like Kim Baker, owner of Quality Auto Sales of Willmar, are not included. Consumers will need to buy new cars in order to benefit from the rebate.
Still, Baker said he doesn't expect the program to affect his business one way or the other.
"There are certain people who buy used cars only, and others who only buy new," he said. "I don't think this will change that."
Al Van Buren, of Midwest Motors of Willmar Inc., said that while there could be a small impact, he doesn't think enough people will be able to take advantage of the program in the first place for it to affect his business.
"It's a possibility," he said, "but a lot of people who want to improve their mileage won't qualify for the program, so the effect will be quite limited, I think."
Eric Bolton, a spokesman with the National Highway Traffic Safety Administration, said he had never heard of a complaint by a used car dealer on the issue.
He said the will of Congress when it passed the program into law was to not only give a boost to Detroit, but to ensure that those trading in a "clunker" would get the best, cleanest, and most fuel efficient car available and not just another old car.
"That's not to say that used cars are going to be clunkers," he said, "but the purpose of this was to get fuel efficient cars on the highway and help the nation's auto industry in the process."