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'Cash for Clunkers,' model changeover leaving dealers without cars

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JAMES P. LEUTE
August 11, 2009
— Bob Clapper admits he's circling the wagons at his car dealership on Janesville's east side.

Among dealers, he's not alone in pushing his dwindling supply of new vehicles to the perimeter to make the lot appear full to casual passersby.


But potential car buyers who pull into the dealership will see an inventory void created by a combination of the federal government's "Cash for Clunkers" program, bankruptcy-induced production cuts earlier this summer and the traditional timing of model changeovers.


Unlike Fagan, Bryden Motors in Beloit doesn't even have the wagons to circle, said Bob Williams, general manager of the Chrysler, Dodge and Jeep dealership.


Just a year ago, Bryden had 220 new vehicles. Monday, it was down to just one: a 2009 Dodge Challenger.


Earlier this summer, General Motors and Chrysler idled many of their U.S. plants. Thatócoupled with the clunkers program and the fact that August is the month when current-year models traditionally make way for the new modelsóhas created holes in dealer inventories.


"To a certain extent, this happens at this time every year," said Clapper, vice president of Fagan Chevrolet-Cadillac.


Dick Stockwell of Rock County Buick Pontiac GMC agreed.


"Even with the model changeover and the Cash for Clunkers program, we've still been able, for the most part, to get what people want," said Stockwell, who noted that he has a pretty good selection of Hondas. "Sometimes they might need to be a little flexible on the color or some of the equipment, but we've been able to fill most requests."


Clapper said it becomes more difficult by the day to fill requests, particularly as they relate to 2009 models.


A few months ago, Fagan ordered about 80 2009 cars that never arrived.


And they never will, as the automaker is now building 2010 models that are starting to move on to dealer lots.


"Those orders just went away," Clapper said. "They aren't coming back. We are getting 2009 trucks, which are still being built."


Clapper, Stockwell and Williams said the clunkers program has driven traffic to their showrooms.


"We really didn't expect this huge demand," Williams said. "We're seeing a lot of people who just want to get rid of their clunker, but we're also seeing people who are looking for changeover deals.


"Given the choice of having way too many cars or way too few, I'd take way too few."


Clapper said Fagan has enrolled about 25 clunkers in the program, and the average fuel mileage improvement has been 9 percent.


Initially skeptical, Clapper said the program seems to be doing what was intended.


"It's certainly driven some sales for us, and, quite frankly, a lot of the clunkers we've seen are vehicles that needed to be off the road."


Stockwell said the consensus among dealers he's spoken with is that the program is working better than dealers originally expected.


"It's been a pleasant surprise," he said.


The National Highway Traffic Safety Administration is administering the federal program, which offers rebates of $3,500 to $4,500 for consumers who upgrade to better fuel efficiency.


Through Friday, the agency had received 219,000 applications for $923 million of the $3 billion rebate program that the government recently extended through August. About 14,000 of the applications were ready for payment, while about 1,600 dealers have received the government payment.


Stockwell and Clapper said they're receiving new cars every day, although it will take some time to completely refill their lots that sit across Milwaukee Street from one another.


Williams said the new 2010 models will arrive at Bryden in a couple of weeks.


Clunkers are killed and stripped for parts

It's called Liquid Glass, and it's become the agent of death for vehicles enrolled in the government's "Cash for Clunkers" program.


Normally asked to breathe new life to vehicles, dealership mechanics across the country are draining the oil from clunkers and replacing it with a sodium silicate solution the government deemed necessary to make sure the vehicles never hit the road again.


Bob Williams, general manager of Bryden Motors in Beloit, said the sodium silicate solution usually takes two or three minutes to stop an engine cold.


His mechanics recently infused it into the engine of 1994 Jeep.


The engine continued to run for 15 minutes before finally giving up, which Williams said made sense because the vehicle had 430,000 miles on its odometer.


"That vehicle just refused to die," he said.


Once the vehicles are disabled, they are sold and shipped to registered salvage yards that recycle many of the useable parts.


Fagan Chevrolet-Cadillac has been shipping its clunkers to LKQ Star Auto Parts in Janesville, while Williams said his vehicles are destined for Erickson's Auto Parts in South Beloit.


LKQ Star is using the vehicles in its wholesale and self-service operations, said Sarah Lewensohn, a company spokeswoman.


"This program has been a real positive for us," she said. "It's a nice opportunity for us to gather inventory in what's seasonally a slow time. The demand for recycled parts doesn't ever dissipate."



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