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Cash for Clunkers boosts car sales; Smith votes against renewal
By Robert Pore
robert.pore@theindependent.com
After months of sagging sales, the government's Cash for Clunkers program has revitalized the car and truck market.
The government program that pays consumers to trade in their old cars and trucks for new and more fuel-efficient ones was apparently the needed spark to ignite vehicle sales. A slumping economy had forced major auto and truck manufacturers into bankruptcy or merger and slowed the flow of credit for vehicle purchases.
The federal government set up a $1 billion budget for rebates for new car sales. The program was officially launched last week.
But consumer demand was so strong the program quickly faced running out of money.
On Friday, the House voted to rush $2 billion into the program to keep consumers purchasing new cars and trucks.
House members approved the measure 316-109, and Senate action is likely next week, ensuring the program won't be affected by the sudden shortage of cash, the Associated Press reported.
U.S. Rep. Adrian Smith, R-Neb., voted against funding the program.
"This legislation was rushed through, and it was bad public policy," Smith said. "It will put us further in debt, and it is just another example of the federal government insinuating itself into the marketplace."
To pay for the additional $2 billion, the House voted to transfer money from the Department of Energy's renewable energy loan guarantee program.
That concerned the president of the Renewable Fuels Association, Bob Dinneen. The organization wants Congress to replenish the fund.
"One of the advantages of the Cash for Clunkers program is putting more fuel-efficient cars on the road. However, those new cars should also be running on renewable fuels like ethanol in order to benefit both the changing climate and the domestic economy," Dinneen said. "For the U.S. long-term auto and fuel needs, it seems counterproductive to limit the renewable fuels industry."
Called the Car Allowance Rebate System, or CARS, the program is designed to help the economy and the environment by spurring new car sales. Car owners can receive federal subsidies of up to $4,500 for trading in their old cars for new ones that achieve significantly higher gas mileage.
White House officials on Friday assured consumers the program was still running and people could still take advantage of the program this weekend, according to AP.
On Friday, it was estimated nearly a quarter of a million vehicles had been purchased as a result of Cash for Clunkers.
The program was set up to boost U.S. auto sales and help struggling automakers through the worst sales slump in more than a quarter-century. Sales for the first half of the year were down 35 percent from the same period in 2008, the AP reported, and analysts are predicting only a modest recovery in the second half.
According to the Nebraska Department of Revenue, motor vehicle net taxable sales in Adams, Buffalo and Hall counties began a steep decline in February, with Adams seeing a 17.1 percent drop in net taxable sales; Buffalo, 14.5 percent; and Hall, 25.7 percent.
Net taxable sales declined even further in March, with Adams down 25.3 percent from the previous year; Buffalo, 15.6 percent; and Hall, 30 percent.
Net taxable sales were still down in April, with Adams down 26.4 percent from the year before and Buffalo, 18.4 percent. Hall saw net taxable sales improve but still be down from the previous year at 15.7 percent.
Troy Heusinkvelt, general manger of Anderson Ford in Grand Island, said on Thursday that the Cash for Clunkers program had kept the dealership busy this week.
"People are jumping on it before the money is gone," Heusinkvelt said. "We have sold more new vehicles this month than we have had in a while."
On Thursday, Heusinkvelt said the dealership had sold about 90 vehicles during July.
"We are selling a little bit of everything," he said.
Because government money is financing the program, Heusinkvelt said, manufacturers, such as Ford, are providing additional incentives for purchasing new cars to give the consumer an even better deal.
In some cases, between the government money for the clunker and the manufacturers' rebates and discounts, people were walking away with new vehicles for less than $10,000.
Heusinkvelt said the engines in the clunkers are salvaged by the dealer and the frame and rest of the vehicle goes to the junkyard to be crushed for scrap metal.
Even before the Cash for Clunkers promotion, Heusinkvelt said, vehicle sales had been good as people were shopping for more fuel-efficient vehicles and credit became easier to access.
"The biggest thing we hear in the store is that Ford didn't take the bailout and isn't government owned," he said.
Loy Todd, president of the Nebraska New Car and Truck Dealers Association, said dealers from across Nebraska have said it's "wonderful to see the traffic and to start moving some vehicles" with sales generated by Cash for Clunkers.
While the program has been successful, Todd said, it's also complicated when it comes to both consumers and dealers getting their deals approved.
"But it has been a huge success from the standpoint of stimulating sales and hopefully the economy," Todd said.
While the program has been a shot in the arm for increasing vehicle sales, Todd said Nebraska has been lucky compared to other regions in the country. Sales have been better than in other areas, though down compared to last year.
"Sales were definitely down, but this has traffic moving again, and that's great," he said. "I think it is easily the most visible success story of all the various things that have been attempted to stimulate the economy."
Because the auto industry is so dependent on credit, sales were hurt when access to credit became difficult because of the global economic downturn, Todd said.
"There was a lot of pent-up demand and this is helping to move that," he said.
The government program that pays consumers to trade in their old cars and trucks for new and more fuel-efficient ones was apparently the needed spark to ignite vehicle sales. A slumping economy had forced major auto and truck manufacturers into bankruptcy or merger and slowed the flow of credit for vehicle purchases.
The federal government set up a $1 billion budget for rebates for new car sales. The program was officially launched last week.
But consumer demand was so strong the program quickly faced running out of money.
House members approved the measure 316-109, and Senate action is likely next week, ensuring the program won't be affected by the sudden shortage of cash, the Associated Press reported.
U.S. Rep. Adrian Smith, R-Neb., voted against funding the program.
"This legislation was rushed through, and it was bad public policy," Smith said. "It will put us further in debt, and it is just another example of the federal government insinuating itself into the marketplace."
To pay for the additional $2 billion, the House voted to transfer money from the Department of Energy's renewable energy loan guarantee program.
That concerned the president of the Renewable Fuels Association, Bob Dinneen. The organization wants Congress to replenish the fund.
"One of the advantages of the Cash for Clunkers program is putting more fuel-efficient cars on the road. However, those new cars should also be running on renewable fuels like ethanol in order to benefit both the changing climate and the domestic economy," Dinneen said. "For the U.S. long-term auto and fuel needs, it seems counterproductive to limit the renewable fuels industry."
Called the Car Allowance Rebate System, or CARS, the program is designed to help the economy and the environment by spurring new car sales. Car owners can receive federal subsidies of up to $4,500 for trading in their old cars for new ones that achieve significantly higher gas mileage.
White House officials on Friday assured consumers the program was still running and people could still take advantage of the program this weekend, according to AP.
On Friday, it was estimated nearly a quarter of a million vehicles had been purchased as a result of Cash for Clunkers.
The program was set up to boost U.S. auto sales and help struggling automakers through the worst sales slump in more than a quarter-century. Sales for the first half of the year were down 35 percent from the same period in 2008, the AP reported, and analysts are predicting only a modest recovery in the second half.
According to the Nebraska Department of Revenue, motor vehicle net taxable sales in Adams, Buffalo and Hall counties began a steep decline in February, with Adams seeing a 17.1 percent drop in net taxable sales; Buffalo, 14.5 percent; and Hall, 25.7 percent.
Net taxable sales declined even further in March, with Adams down 25.3 percent from the previous year; Buffalo, 15.6 percent; and Hall, 30 percent.
Net taxable sales were still down in April, with Adams down 26.4 percent from the year before and Buffalo, 18.4 percent. Hall saw net taxable sales improve but still be down from the previous year at 15.7 percent.
Troy Heusinkvelt, general manger of Anderson Ford in Grand Island, said on Thursday that the Cash for Clunkers program had kept the dealership busy this week.
"People are jumping on it before the money is gone," Heusinkvelt said. "We have sold more new vehicles this month than we have had in a while."
On Thursday, Heusinkvelt said the dealership had sold about 90 vehicles during July.
"We are selling a little bit of everything," he said.
Because government money is financing the program, Heusinkvelt said, manufacturers, such as Ford, are providing additional incentives for purchasing new cars to give the consumer an even better deal.
In some cases, between the government money for the clunker and the manufacturers' rebates and discounts, people were walking away with new vehicles for less than $10,000.
Heusinkvelt said the engines in the clunkers are salvaged by the dealer and the frame and rest of the vehicle goes to the junkyard to be crushed for scrap metal.
Even before the Cash for Clunkers promotion, Heusinkvelt said, vehicle sales had been good as people were shopping for more fuel-efficient vehicles and credit became easier to access.
"The biggest thing we hear in the store is that Ford didn't take the bailout and isn't government owned," he said.
Loy Todd, president of the Nebraska New Car and Truck Dealers Association, said dealers from across Nebraska have said it's "wonderful to see the traffic and to start moving some vehicles" with sales generated by Cash for Clunkers.
While the program has been successful, Todd said, it's also complicated when it comes to both consumers and dealers getting their deals approved.
"But it has been a huge success from the standpoint of stimulating sales and hopefully the economy," Todd said.
While the program has been a shot in the arm for increasing vehicle sales, Todd said Nebraska has been lucky compared to other regions in the country. Sales have been better than in other areas, though down compared to last year.
"Sales were definitely down, but this has traffic moving again, and that's great," he said. "I think it is easily the most visible success story of all the various things that have been attempted to stimulate the economy."
Because the auto industry is so dependent on credit, sales were hurt when access to credit became difficult because of the global economic downturn, Todd said.
"There was a lot of pent-up demand and this is helping to move that," he said.
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