MOUNT VERNON — The “Cash for Clunkers” program has brought a boost to many local car dealers, and has even primed the pump to send sales to pre-recession levels for some, local dealers are reporting. But the federal government’s rebate program remains controversial, due to its temporary status and the deficit spending supporting it. Whatever the long-term effect may prove to be, there are signs that the program’s immediate stimulus effect has been positive.
“There’s no question we’re on the other side of the storm now,” said John Walsh of Fredericktown Chevrolet, who said that the worst of the recession hit car dealerships in the first half of this year. With the impact of Cash for Clunkers, Walsh said not only were his company’s sales going to be recovering in the third quarter, it looks like they will actually surpass sales for the third quarter of 2008.
Ryan Sponsler of Donley Ford in Mount Vernon said that they have also seen a boost in business from the program.
“It’s pushed people into the buying process, because those people with vehicles as old as they were are normally the type of customers that keep their vehicles for a very long time,” Sponsler said. “Had that $4,500 not come out, I think they just would have sat tight for a little bit longer.”
He added that he expects the wave to start gradually subsiding as not only has the initial rush passed, but also, more significantly, many dealers’ inventories are starting to get depleted.
Jerry Goetzman of Goetzman Chrysler Plymouth Dodge said that his dealership didn’t have an abundance of inventory when Cash for Clunkers hit, thanks to Chrysler’s scaling back of operations. That has made the impact smaller on his business, though he said it has definitely increased the traffic. In some cases, buyers who hoped to qualify for Cash from Clunkers, but didn’t, nonetheless saw bargains they liked and made purchases anyway, Goetzman said.
One negative that Goetzman pointed out was the traditional market of older used vehicles bought specifically as first cars for young drivers, or as backup cars for families.
“This is taking those cars out of the market,” Goetzman said. He said it isn’t yet clear what will happen when families are searching for cheap or used vehicles like that, but find that little or nothing is available in that price range, because the inefficient older vehicles have mostly been scrapped.
Knox County Clerk of Courts Mary Jo Hawkins said that the burst of buying will help the county’s general fund at the end of the year, which will benefit from a bigger surplus of leftover budget funds than what Hawkins had been expecting. While this will by no means be large enough to erase the county’s long-term budget crunch, it will take the edge off the potential severity of next year’s budget, Hawkins said.
Hawkins cited numbers to compare the impact of the recession to last year’s unspectacular but solid figures. From the beginning of January to the end of May, 2008, the clerk’s office processed 21,212 pieces of business, while in the same period this year, the office processed only 15,545 items, a drop of 27 percent. In the first 10 days of business this August, though, not only has the number of titles recovered, it is actually up 6 percent from the same period last year.
“This program really has been a huge incentive,” Hawkins said. “People are buying new cars and local dealers are doing great business.”
At this point, though, Hawkins has not fully reopened the title office, which has been closed on Wednesdays. As the Cash for Clunkers program is a temporary initiative, there’s no guarantee business will continue to be brisk as the program winds down, and, regardless, the county’s budget remains tight. Hawkins said that this was part of the longer-term big picture, which has seen the county’s title processing revenue drop steadily ever since cross-county titling was implemented. Cash for Clunkers will provide a temporary boost, but the long-term picture remains flat.
“I’m just afraid, when it’s over, it’s over,” Hawkins said.
