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Uncle Sam could help you cash in that gas-guzzlin' clunker [The Virginian-Pilot, Norfolk, Va.]

By Carolyn Shapiro, The Virginian-Pilot, Norfolk, Va., Source: MCT Business News

Jul. 1--Consumers are finally showing the kind of interest in car-buying that auto dealers haven't seen in months.

The reason is cash. For their clunkers.

They have heard about the Car Allowance Rebate System, informally the "cash-for-clunkers" program, part of a law that President Barack Obama signed last week. It allows drivers who trade in older, less-efficient vehicles for those with greater fuel economy to receive as much as $4,500 in credit from the federal government.

Checkered Flag Auto Group's call center in Virginia Beach has fielded about 200 inquiries in the past week. Since Friday, sales representatives for First Team Toyota in Chesapeake have met with eight to 10 potential customers asking about trading in their old cars.

Local auto dealers said they expect the program to rev up sales.

"It has generated a great deal of curiosity," said Steve Snyder, senior vice president of Checkered Flag, which sells many fuel-efficient vehicles -- Toyotas, Minis, Smart Cars and some diesel-engine

Volkswagens -- that would probably meet the criteria for the credit. "I think it's going to help the whole industry."

Charles Barker Automotive Network, based in Virginia Beach, also sells fuel-efficient Toyotas, Nissans and Scions.

"Anything that will stimulate our business certainly is welcome," said Nathan Drory, the dealership's president. "It is only going to gain momentum" as more information is released in coming weeks. The program officially goes into effect today, but it will take about three weeks to get it running. Dealers said they must wait for the government to issue final rules for registering with the program, ensuring that consumers qualify, scrapping the traded-in vehicles and receiving reimbursement for the credit.

For consumers who meet the criteria, the law directs dealers to dole out the funds toward the sale. Before the car leaves the lot, they want guarantees that they'll get paid back.

Until then, consumers won't find many dealers willing to offer them the program's money. The law prevents dealers from moving forward before they register, and they can't register until the agency overseeing the program sets up the application form.

"Nobody in the government's figured out what the rules are yet," said Fred Miller, president of Hall Automotive, the region's largest dealer group. For now, the First Team sales staff will help customers figure out whether they qualify for the program and what kind of credit they could get, said Gerry Reust, the dealership's president. First Team plans to call those qualifying customers back as soon as they can take advantage of the program.

Consumers don't necessarily qualify simply by driving a vintage beater. The car can't be older than 25 years and must get 18 miles per gallon or less. With improved emissions controls required in the 1990s, many vehicles made then get more than 18 mpg, said Buddy Perry, vice president of Perry Buick Pontiac and Perry Subaru, both in Norfolk. Also under the CARS program, the owner must show that the vehicle has been registered and insured for the past year, preventing opportunists from quickly buying a junked car off a scrap lot just to pocket the credit.

Those who do qualify can significantly reduce the cost of a new car. Hall Automotive has Nissan Versas priced at $18,000, Miller said. That could drop to $11,500 with the $4,500 credit under the new program plus other incentives.

"I see a 10 percent increase in business," he said of the CARS program. "This is a great consumer benefit."

In anticipation of increased customer traffic, Checkered Flag recently ordered extra stock of its fuel-efficient cars, Snyder said. Even customers who don't meet the criteria "will end up probably purchasing during this time, because it'll bring them into the market," he said.

Once the rules are in place, Reust advised, consumers might want to move quickly. With a $1 billion limit on the program, the government could run out of money before it ends Nov. 1.

"Once the money's gone," he said, "it's gone."

Carolyn Shapiro, (757) 446-2270, carolyn.shapiro@pilotonline.com

To see more of the The Virginian-Pilot, or to subscribe to the newspaper, go to http://www.pilotonline.com.

Copyright (c) 2009, The Virginian-Pilot, Norfolk, Va.

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