NEW YORK – The U.S. government will shut down its Cash for Clunkers program at 8 p.m. Monday, in a bid to avoid car dealers and shoppers from claiming more than the $3 billion set aside for the program.
“This program has been a lifeline to the automobile industry, jump starting a major sector of the economy and putting people back to work,” said U.S. Transportation Secretary Ray LaHood. “At the same time, we’ve been able to take old, polluting cars off the road and help consumers purchase fuel efficient vehicles.”
“The government jump-started our industry and now the industry has jump started the economy,” said Brian Benstock, GM and Vice President of Paragon Automotive in New York. “They did their job getting the industry going and we need to do our job keeping it going.” Paragon joined other top U.S. Automotive Retailers in launching www.AutoStimulusPlan.com, a dealer stimulus program to help consumers who were left behind by the government’s plan. Over 90% of consumers were not eligible for the government’s program and this left a lot of consumers unsatisfied. Now that the government’s “Cash for Clunkers” program is ending, many of the largest retailers in the country are participating in the new stimulus plan that gives consumers up to $4500 of additional trade-in value towards the purchase of a new or used vehicle. “The public sector did a great job getting us back on the road but the private sector needs to drive America forward,” said Benstock.
The new stimulus plan has fixed many of the problems with the government program. The new plan is more inclusive because all trade-ins older than 2007 are eligible regardless of their current mpg and consumers can purchase or lease any new or used vehicle with an improved fuel economy of 2mpg. This is a contrast to the government program which appealed to less than 10% of the market because it excluded trade-ins with more than 18mpg, used cars and short term leasing and most vehicles needed to get at least 4mpg improvement to qualify.
While clunker business began to slow down, dealers participating in the New Stimulus Plan have seen their sales continue to rise because they are helping the larger group of consumers that were left behind by the government program. Paragon Automotive, one of the participating dealers, went from 17th in new vehicle sales to #4 in the nation. “The new stimulus plan helped our new car business but it had an enormous impact on used vehicle sales,” said Benstock. After Paragon implemented the new stimulus plan they had their best used vehicle sales month and became the #1 certified pre-owned Honda and Acura dealer in the world.
Paragon’s results since the New Stimulus Plan took effect have led to a historic month:
* They are on pace for 600 new vehicles to be sold and 300 used vehicles. This represents a 100% increase in new car business and a 50% increase in pre-owned business.
* 900 vehicle sales created estimated sales tax revenues of $2,000,000 for the month which equals $24,000,000 at the dealerships’ current run rate.
* 900 unit sales created $24,000,000.00 in gross sales.
If half of the dealers in the country (10,000) generated the same tax revenue last month it would generate a total of $20 billion in only one month. In a time when states are in danger of bankruptcy, incremental tax revenue is a big help. John Malishenko, Director of Operations for Germain Automotive, another participating dealer in the new Auto Stimulus Plan, reported that sales have dramatically increased as a result of the new stimulus plan. “We had our second best weekend of the year. We’ve seen a 40% increase in unit sales versus July and we are currently pacing $45,000,000 of sales for the month. While other dealers’ business has been falling off, our business has been setting records because we are helping customers that others are turning away.”
The new stimulus plan helps retailers increase their new vehicle sales but also helps them improve their used vehicle sales. Used vehicle inventories have shrunk because the clunkers have to be destroyed. “We have to buy more used cars at auctions for higher prices,” said John Malishenko, Director of Operations for the Germain Automotive Group who owns dealerships in Ohio, Arizona, Florida and Arkansas. “I would prefer to give customers 20 percent more for their trade-in to earn their business rather than paying more to Manheim Auction. If I overpay under the new stimulus plan, I still sold a car and I have a customer who will service with me over the long term.”
The dealer Auto Stimulus Plan includes used vehicles and allows dealers to resell the trade-ins. “Letting consumers buy a used vehicle or lease a new vehicle makes it affordable for a lot of people who could not participate otherwise,” said Scott Gruwell from Courtesy Auto Group in California and Arizona, one of GM’s largest dealers and a participating dealer.
“We needed to do something to help out all the customers who were upset that they could not participate in the government program,” said Rick Case, owner of Rick Case Automotive Group in Florida, Georgia and Ohio. “Consumers love the new stimulus plan because they save a lot of money on their purchase while also reducing their gas and repair expenses.”
The Auto Stimulus Plan is a private sector program promoted by retailers to help consumers, the economy and the environment at the same time. To qualify a consumer must select a new or pre-owned vehicle with a 2MPG improvement over their current vehicle, which is the same requirement the government program has for SUV’s, but it applies to all vehicles under the dealer plan.
“The mpg requirements are lower because the primary goal of the plan is to help consumers that didn’t qualify for the government’s program and to stimulate the economy through improved sales, jobs and spending,” said Gruwell. “As a result, the environmental benefits may not be as big as the government program but it will help more customers get into more fuel efficient vehicles.”
“If a consumer does not have a trade, they can benefit from the extraordinary manufacturer incentives that are out today,” added Case. “In addition to the stimulus, our dealership is offering up to $4500 of savings to consumers.”
Consumers can learn more about the program and begin connecting with participating retailers by visiting: www.AutoStimulusPlan.com.
The Auto Stimulus Plan gives consumers up to $4500 of additional trade-in value towards the purchase or lease of a new or used vehicle with improved fuel economy. The program has fewer rules, easier paperwork and no minimum MPG requirements for trade-ins.
PROGRAM REQUIREMENTS
Current Vehicle Requirements
* Vehicle must be older than 2007
* Vehicle must be in working condition
* Vehicle has been owned and registered for at least 6 months
* No minimum mpg requirements
* Vehicles that are not eligible are: salvaged vehicles and vehicles with floor or frame damage
Replacement Vehicle Requirements
* Replacement vehicle must have a minimum of 2mpg improvement
* New and Used Vehicles Qualify
* All makes and models
* No minimum mpg requirements
* No price restrictions
* This plan is not valid in combination with the governments C.A.R.S. program
The plan varies based on the year, make and model of the eligible vehicle. The plan may also vary in some states due to state laws that regulate automotive advertising and promotion. The Auto Stimulus Plan was planned to end when the government’s program expired but they have extended the end date to November 1st, because of the sooner than expected termination. Visit www.AutoStimulusPlan.com for details.
The organization informs consumers that they should be patient if they cannot get through to the website, www.AutoStimulusPlan.com, on their first try. During the program’s launch there was an overwhelming level of traffic resulting in periods of interruption. Consumers are advised to visit at a later time if the site is not functioning properly.
