The Cash For Clunkers program officially kicked off back on July 1st. For more details on this programs click here. Most dealers are eagerly awaiting the official guidelines for the program that are set to be released on July 24th. However, several dealership have taken the risky step of putting the program into place without knowing the final guidelines.
The program allows owners of gas guzzling, older vehicles to trade in for a newer model that gets better gas mileage. The owners will get a voucher for varying amount of money towards the purchase of the new vehicle.
The government has previously released some guidelines that help determine what vehicles are eligible for the vouchers and how much the vouchers will be valued at. But the initial guidelines are not set in stone until the official announcement expected on July 24th. That has not held dealers back.
To kick off sales, some dealers have put the program into use already. Paragon Honda Acura takes the credit as being the first dealership to honor the cash for clunkers program on July 1st. Its customer trade a 1999 Caravan in for a 2009 Honda Fit, received his voucher for purchase and got a significant discount.
The NHTSA will provide the final rules regarding what is officially termed CARS or Car Allowance Rebate System and they are strongly urging dealers to refrain from selling vehicles under the program until the announcement is made, but desperate dealers in these trying times are attempting to kick off sales in any way possible. Additionally, any individual that attempts to defraud the program will be fined $15,000. There is a lot of risk involved, but it's a risk many are willing to take.
Many dealers are taking the trade in and applying the vouchers to the new vehicles. They will receive their vouchers soon, but if the trade in vehicle does not qualify, dealers could have to pay $5,000 out of pocket on some trades.
The owner of Paragon Honda Acura has placed orders for 120 Accords and 240 Civics to get ready for the program. Both vehicles should be eligible for voucher and owner Benstock sure hopes so, otherwise he has a large order of vehicles that could be difficult to sell.
Any vehicle traded in under the program is by law to be scraped. However, dealers are holding off on the scraping orders until they can verify that the vehicle in question qualifies for the program.
One thing is clearly obvious; dealers do not know what to do at this point as they are awaiting final words from the NHTSA. They are acting cautiously, but also hopefully. If sales and trade-ins are not eligible, already struggling dealerships could be hit hard.
Let's hope the decision is announced on schedule and vehicle sales will jump immediately due to the cash for clunkers program. This program will take old, inefficient vehicles off the road for good, will increase sales of new vehicles, and will allow buyers to save a few bucks in the process. July 24th is only a day away and we will update you with the finalized guidelines as soon as they become available.
Source: Wards Auto (Login required)