It is worth shopping around now even though the curtain has dropped on Cash for Clunkers.
As the Car Allowance Rebate System (CARS) or “cash for clunkers” program winds down this Monday, automotive retailers and manufacturers are attempting to keep the sales momentum going by offering a variety of incentives to keep showroom traffic flowing and the Clunkers sales increases going.
This, natural response from car dealers and makers who — however briefly — are seeing projected retail sales in August rise above the one million mark for the first time in two years, offers prospective buyers excluded from the taxpayer-financed rebate program a chance to still save money on a new or used vehicle. It is worth shopping around now even though the curtain has dropped on Clunkers.
In the interest of honest disclosure, we here at The Detroit Bureau are biased – we do not think that car dealers are evil incarnate as they are frequently portrayed by more, well, mainstream media. We believe that promoting new vehicle sales is good for the economy, good for air quality, and about the only short-term way out of the Great Recession we have been enduring for far too long. The good dealers clearly lay out the deal for a customer and give them time to comparison shop.
We also think that pumping billions upon billions more taxpayer dollars into AIG or Citibank or their bloated executive bonuses will not help create or sustain jobs. It is clear to us that Clunkers helped the overall economy, perhaps more than any of the other pork that lawmakers over loaded the stimulus bill with. If automakers and dealers now show a little old-fashioned American “yes we can” spirit, we might be on the way to a sustained recovery. In addition, although a subject for another day, since the Federal program was so effective, why is the government ending it now?
One example of such a private “post Clunkers” program now available is at http://www.autostimulusplan.com/, which, to be clear, is not affiliated with CARS. Some of the larger auto retailers in the country are using this web site to promote a dealer-funded rebate program that gives buyers up to $4,500 of additional trade-in value towards the purchase of a new or used vehicle. Better still, unlike Clunkers, which ends Monday, it runs through November.
This latest sales promotion deserves a closer look in my view since is more inclusive than the politically compromised “Clunkers” terms. All trade-ins older than the 2007 model year are eligible regardless of their fuel economy, and consumers can purchase or lease any new or used vehicle with an improved fuel economy of 2 mpg to qualify. This is in contrast to the government program, which excluded trade-ins that got more than 18 mpg, or the purchase of used cars, and eliminated leasing contracts of fewer than five years, among other such restrictions. In addition, Clunkers required some vehicles to get at least four mpg better than the trade-in.
Here is how it works, according to Brian Benstock, General Manager and Vice President at Paragon Auto Group in New York City, one of the largest Honda and Acura dealers in the U.S. and the largest seller of certified pre-owned Hondas and Acuras.
Participating dealers will put a value on your trade-in for a new or used car and add 10% or 20% over the NADA (National Automobile Dealers Association) retail book value after deducting reconditioning fees needed to resell the car. The 10% increase applies to a purchase of a vehicle that is zero-to-five mpg better than the trade; above 5 mpg, 20% applies. The maximum trade-in credit added is $4,500.
When I asked Benstock what the catch is, since this sounds too good to be true, he said, “the only way a customer could get hurt, is if the dealer doesn’t actually use the real NADA retail trade-in value when applying the rebate.” He says it will not happen at his store, since the customer is presented with a worksheet that details all the numbers.
Benstock also says that customers are free to shop around, and that in his market cars are selling at a discount to the Manufacturer’s Suggested Retail Price (MSRP), with or without a trade-in. His most popular deal is currently a Honda Civic four-door LX model. With a good credit rating, a customer putting $1,000 down, plus taxes and licensing, will see monthly payments on a 3-year lease of $199. Accords come in at about $270 a month for a comparable deal.
Participating dealers in this program include Paragon Auto Group, Queens, New York; Courtesy Chevrolet in Arizona and Southern California; Rick Case Automotive in Florida, Georgia and Ohio; Sheehy Automotive in Washington DC, Virginia, Maryland and Baltimore; Germain Automotive in Florida, Arizona, Ohio and Arkansas.